Use the data set CPS04 described in Empirical Exercise 4.1 to answer the following questions.

a. Discuss the internal validity of the regressions that you used to answer Empirical Exercise 8.1(1). Include a discussion of possible omitted variable bias, misspecification of the functional form of the regression. errors-in-variables, sample selection, simultaneous causality, and inconsistency of the OLS standard errors.

b. The data set CPS92_04 described in Empirical Exercise 3.1 includes data from 2004 and 1992. Use these data to investigate the (temporal) external validity of the conclusions that you reached in Empirical Exercise 8.1(1). [Note: Remember to adjust for inflation as explained in Empirical Exercise 3.1(b).]