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Consider the regression model log(Wage) = Bo + B, · Educ + B2 ▪ Age + Bz • Ability +U, where Wage indicates the individual's wage, Educ (exogenous) the years of education, Age (exogenous) the age in years, and Ability (endogenous) the individual's level of ability at work. Now we have three other jointly exogenous variables, ParEduc, the parents' education level, Expr, the individual's years of work experience, and KWW, the knowledge of world work score. If the first-stage F statsitic now is 46.78, the Sargan statistic is 4.29, and the Hausman statistic is 25.49. The table of distributions are provided above. It is implied that O A. both TSLS and OLS are consistent under the 5% significant level; hence, it is equivalent to use either one. O B. both TSLS and OLS are consistent under the 5% significant level; hence, we should use OLS for efficiency. O C. the TSLS estimator will be consistent, but OLS is inconsistent, under the 5% significant level; hence, we use TSLS.

Consider the regression model log(Wage) = Bo + B, · Educ + B2 ▪ Age + Bz • Ability +U, where Wage indicates the individual's wage, Educ (exogenous) the years of education, Age (exogenous) the age in years, and Ability (endogenous) the individual's level of ability at work. Now we have three other jointly exogenous variables, ParEduc, the parents' education level, Expr, the individual's years of work experience, and KWW, the knowledge of world work score. If the first-stage F statsitic now is 46.78, the Sargan statistic is 4.29, and the Hausman statistic is 25.49. The table of distributions are provided above. It is implied that O A. both TSLS and OLS are consistent under the 5% significant level; hence, it is equivalent to use either one. O B. both TSLS and OLS are consistent under the 5% significant level; hence, we should use OLS for efficiency. O C. the TSLS estimator will be consistent, but OLS is inconsistent, under the 5% significant level; hence, we use TSLS.

College Algebra
College Algebra
7th Edition
ISBN:9781305115545
Author:James Stewart, Lothar Redlin, Saleem Watson
Publisher:James Stewart, Lothar Redlin, Saleem Watson
Chapter1: Equations And Graphs
Section: Chapter Questions
Problem 10T: Olympic Pole Vault The graph in Figure 7 indicates that in recent years the winning Olympic men’s...
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Consider the regression model log(Wage) = Bo + B1 * Educ + ß2 * Age + B3 * Ability + U, where Wage indicates the individual's wage, Educ (exogenous) the years of education, Age (exogenous) the age in years, and Ability (endogenous) the individual's level of ability at work. Now we have three other jointly exogenous variables, ParEduc, the parents' education level, Expr, the individual's years of work experience, and KWW, the knowledge of world work score. If the first-stage F statsitic now is 46.78, the Sargan statistic is 4.29, and the Hausman statistic is 25.49. The table of distributions are provided above. It is implied that O A. both TSLS and OLS are consistent under the 5% significant level; hence, it is equivalent to use either one. O B. both TSLS and OLS are consistent under the 5% significant level; hence, we should use OLS for efficiency. O C. the TSLS estimator will be consistent, but OLS is inconsistent, under the 5% significant level; hence, we use TSLS. O D. both TSLS and OLS are inconsistent.
Transcribed Image Text:Consider the regression model log(Wage) = Bo + B1 * Educ + ß2 * Age + B3 * Ability + U, where Wage indicates the individual's wage, Educ (exogenous) the years of education, Age (exogenous) the age in years, and Ability (endogenous) the individual's level of ability at work. Now we have three other jointly exogenous variables, ParEduc, the parents' education level, Expr, the individual's years of work experience, and KWW, the knowledge of world work score. If the first-stage F statsitic now is 46.78, the Sargan statistic is 4.29, and the Hausman statistic is 25.49. The table of distributions are provided above. It is implied that O A. both TSLS and OLS are consistent under the 5% significant level; hence, it is equivalent to use either one. O B. both TSLS and OLS are consistent under the 5% significant level; hence, we should use OLS for efficiency. O C. the TSLS estimator will be consistent, but OLS is inconsistent, under the 5% significant level; hence, we use TSLS. O D. both TSLS and OLS are inconsistent.
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