Question: A suitable instrumental variable is one that is correlated with the independent variable and affects the dependent variable only through changes in the independent variable.

A suitable instrumental variable is one that is correlated with the independent variable and affects the dependent variable only through changes in the independent variable. Suppose that you are interested in studying the effects of years of education (educ) on hourly wage (wage). You consider the following regression model: wage = g +1educ + it Which of the following would make the best instrumental variable for educ? " Financial aid availability in the individual's state ' Height ' Work ethic Natural ability

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Mathematics Questions!

A suitable instrumental variable is one that is correlated with the independent variable and affects the dependent variable only through changes in the independent variable. Suppose that you are...

Data Analytics True OR False with Full Justification Q1. You are given a task to analyze the salaries of employees in your company and find a representative value for them. Taking into account the...

If you consider that the number of workers in Jordanian insurance companies is (12000), and these companies rank fourth in the ranking of service companies in terms of their contribution to the gross...

A dependent variable is a: Question 9 Select one: a . A variable that always changes in relation to an independent variable b . A variable that may change in relation to an independent variable c . A...

What could be the "Anticipated Contributions" based on the topic: THE CORRELATION BETWEEN THE AMPLATS SHARE PRICE AND PLATINUM PRICES Abstract Background AMPLATS is a large platinum producing company...

give a summary of this article please!!! comment on its implications for manager rewards and investors returns. please answer I really need for class!!!! thank you!!!! Portfolio Performance...

Three Examples Where does one find something that affects incarceration but has no direct We now turn to three empirical applications of IV regression that provide exam- effect on the crime rate? One...

1 Understanding Regression Part 2 - Multiple Regression By Dr. Ardith Baker Oral Roberts University In the Part 1 paper, we explored simple linear regression with respect to understanding the basic...

Elena Modesti Final Statistics Paper Social Statistics Professor Charles 4/24/16 The study of the relationship between different social factors is very important in understanding cause and effect, as...

also will it be positive or negative? 7. An independent researcher is interested in finding out whether there exists a positive relationship between the number of years of formal education received...

Using the following information, decide whether Marks Video Games should close any of itsstores: Clawson Store Redford Store Port Huron Store Sales revenue Variable costs Direct fixed costs Indirect...

A company makes two distinct types of vehicles, A and B. The total expenses during a period as shown by the books for the assembly of 600 of the type A and 800 of the type B vehicles are as under:...

8.33 In a statistical data update regarding safety in the city of Bangkok in Thailand, 184 out of 240 survey participants felt safe walking alone during the daylight hours, and 123 felt safe walking...

DIRECTION: Create a poem that gives importance and value towards Responsibility, Accountability, and Other Core Principles in Business Operations. Minimum of 10 stanza and make 3 or 4 lines per...

2. In this chapter, the reader should reflect on the following concepts: Systemic structuring, the displaced error, the communicable part of knowl-edge, tacit knowledge, hidden knowledge, analogy,...

2. List five points that are crucial to pay attention to if you want to positively influence someone from a foreign culture.

1. Discuss what you think is meant by the following statements: a) Splitting an egg into half to get two chickens. b) We cannot study time by taking apart a clock.