Question: Please, I need this answer asap 2. Consider the following two periods panel data model: Wageit=0+0D2+1Educit+2Expit+3Femalei+ai+uit,t={1,2}, where D2 is a dummy variable which equals to
Please, I need this answer asap
2. Consider the following two periods panel data model: Wageit=0+0D2+1Educit+2Expit+3Femalei+ai+uit,t={1,2}, where D2 is a dummy variable which equals to one in period 2 and zero in period 1. (a) Can we estimate the above model by OLS? Explain why. (b) Explain whether the OLS regression controls for individual-specific unobserved heterogeneity (i.e., a fixed effect ai )? (c) Write down the first differenced model. State which coefficients can be estimated by OLS? (d) Explain whether the first differenced model controls for individual-specific unobserved heterogeneity (i.e., a fixed effect ai )? (e) Write down the demeaned model. State which coefficients can be estimated by OLS? (f) Show that the models in (c) and (e) are actually equivalent
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