Use the data in JTRAIN3 for this question.

(i) Estimate the simple regression model re78 5 b0 1 b1train 1 u, and report the results in the usual form. Based on this regression, does it appear that job training, which took place in 1976 and 1977, had a positive effect on real labor earnings in 1978?

(ii) Now use the change in real labor earnings, cre 5 re78 2 re75, as the dependent variable. (We need not difference train because we assume there was no job training prior to 1975. That is, if we define ctrain 5 train78 2 train75 then ctrain 5 train78 because train75 5 0.) Now what is the estimated effect of training? Discuss how it compares with the estimate in part (i).

(iii) Find the 95% confidence interval for the training effect using the usual OLS standard error and the heteroskedasticity-robust standard error, and describe your findings.