Question: Please help me with solving questions (a) and ( b) . Provide the steps to get to the final solution. THANKS a lot! Consider the

Please help me with solving questions (a) and (b). Provide the steps to get to the final solution. THANKS a lot!

Consider the linear model yi=30+313i+uis where 3; stands for an individual's income, 3 for working hours and u is an error term. In additionI we know that it includes an unobservable characteristic that is correlated with working hours. Let's call it a taste for work. More precisely, we can sag.r that u;- = 5101' + a. where 1:: stands for taste for work. Assume that Elisa-M) = 0 and Elle? | xi) = 0'2. (a) Derive the OLS estimator for 31. (b) Write the expression for the bias 3(31) = E(;1) .81. What does it depend on

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