Attempts

$0\mathrm{.}5$

$0\mathrm{.}5$

Average $\frac{0\mathrm{.}5}{1}$

$14.$ Estimating the variance of the error term

Suppose you are interested in looking at the determinants of a worker's wage, and use the following econometric model to do so:

wage $={}_0+{}_1$ educ $+u$

where

educ $=$ years $of$ education

$u=$ error term

You take a sample of $140$ individuals and collect data on each person's wage and le

${\displaystyle \underset{i=1}{\overset{n}{}}}$widehat$(u{)}_i^2$

ucational attainment.

An unbiased, observable estimator of the variance of the error term $({}^2)$ is hat$({)}^2=\frac{,}{,138}.$