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The following model estimates the effect of the return to education: wage = A + B, educ + Berper + Berper + u (A2) where wage refers to wage in thousands of dollars, educ refers to education level in years, and erper refers to years of experience. Researchers have found that education level is usually misreported by the surveyed individuals. However, while the errors are quite frequent, they are completely at random. What would be the impact of this type of erors on the estimates in Model (A2)? Select one: O a. As the errors are completely at random, they won't cause any problem when estimating Model (A2). O b. This type of errors will bias the estimates of all parameters towards zero. Oc This type of errors will bias the estimate of B towards zero. O d. This type of errors will bias the estimate of Ba towards zero. O e. This type of errors will bias the estimates of B and B towards zero.

The following model estimates the effect of the return to education: wage = A + B, educ + Berper + Berper + u (A2) where wage refers to wage in thousands of dollars, educ refers to education level in years, and erper refers to years of experience. Researchers have found that education level is usually misreported by the surveyed individuals. However, while the errors are quite frequent, they are completely at random. What would be the impact of this type of erors on the estimates in Model (A2)? Select one: O a. As the errors are completely at random, they won't cause any problem when estimating Model (A2). O b. This type of errors will bias the estimates of all parameters towards zero. Oc This type of errors will bias the estimate of B towards zero. O d. This type of errors will bias the estimate of Ba towards zero. O e. This type of errors will bias the estimates of B and B towards zero.

Linear Algebra: A Modern Introduction
Linear Algebra: A Modern Introduction
4th Edition
ISBN:9781285463247
Author:David Poole
Publisher:David Poole
Chapter7: Distance And Approximation
Section7.3: Least Squares Approximation
Problem 31EQ
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The following model estimates the effect of the return to education: wage=B+Beduc + Berper + Berper²+u (42) where wage refers to wage in thousands of dollars, educ refers to education level in years, and exper refers to years of experience. Researchers have found that education level is usually misreported by the surveyed individuals. However, while the errors are quite frequent, they are completely at random. What would be the impact of this type of errors on the estimates in Model (A2)? Select one: O a. As the errors are completely at random, they won't cause any problem when estimating Model (A2). O b. This type of errors will bias the estimates of all parameters towards zero. O c. This type of errors will bias the estimate of ₁ towards zero. O d. This type of errors will bias the estimate of B₂ towards zero. Oe. This type of errors will bias the estimates of B₂ and ₂ towards zero.
Transcribed Image Text:The following model estimates the effect of the return to education: wage=B+Beduc + Berper + Berper²+u (42) where wage refers to wage in thousands of dollars, educ refers to education level in years, and exper refers to years of experience. Researchers have found that education level is usually misreported by the surveyed individuals. However, while the errors are quite frequent, they are completely at random. What would be the impact of this type of errors on the estimates in Model (A2)? Select one: O a. As the errors are completely at random, they won't cause any problem when estimating Model (A2). O b. This type of errors will bias the estimates of all parameters towards zero. O c. This type of errors will bias the estimate of ₁ towards zero. O d. This type of errors will bias the estimate of B₂ towards zero. Oe. This type of errors will bias the estimates of B₂ and ₂ towards zero.
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