7.5 In Example 7.2, let noPC be a dummy variable equal to one if the student does not own a PC, and zero otherwise. (i) noPC is used in place of PC in equation (7.6), what happens to the inter- cept in the estimated equation? What will be the coefficient on noPC? (Hint: Write PC = 1-noPC and plug this into the equation colGPA B+PC+B,hsGPA + BACT.) What will happen to the R-squared if noPC is used in place of PC? Should PC and noPC both be included as independent variables in the model? Explain. REVIE PRO To test the effectiveness of a job training program on the subsequent wages of work- ers, we specify the model log(wage) B+ Btrain + Beduc + Bexper + u, where train is a binary variable equal to unity if a worker participated in the program. Think of the error term u as containing unobserved worker ability. If less able workers have a greater chance of being selected for the program, and you use an OLS analysis, what can you say about the likely bias in the OLS estimator of B? (Hint: Refer back to Chapter 3.)