Question: Please help me with my economics problem. I don't know how to answer it In order to estimate the effect on wage of years of
Please help me with my economics problem. I don't know how to answer it


In order to estimate the effect on wage of years of schooling, researcher B analysed the dataset that researcher A collected in Question 3. Researcher B considers the following regression equation log(income); = Bo + Bieduc;+ .. + U; where educ; is years of schooling for individual / and ... includes additional terms associated with other characteristics in the dataset. When research B was carefully examining omitted factors in the error term Uj, she realised that unobserved factors such as motivation, and work_ethic, would determine the income level and be correlated with the variable of interest, educ;. If researcher B's conjecture regarding the unobserved factors is correct, then: Hint: see page 1 to page 13 of Lecture Note 4. The OLS estimator B 1 would not be computed. Ob. The OLS estimator B 1 would be biased. Oc. . The OLS estimator B 1 would suffer imperfect multicollinearity. Od. The OLS estimator B 1 would have a large standard error.Consider the following regression model Y=f30+B1X1 +82X2 +11 where E[U I X1, X2] = 0. Suppose X1 and X2 are highly (but not perfectly) correlated. Then, Hint: see page 23 to page 30 of Lecture Note 4. T a. OLS estimators are biased. T b'OLS estimators are not consistent. T c. OLS estimators will have large standard errors. T d'One of X1, X2, or the constant should be dropped
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