Question: Use MROZ.RAW for this exercise. (i) Reestimate the labor supply function in Example 16.5, using log(hours) as the dependent variable. Compare the estimated elasticity (which

Use MROZ.RAW for this exercise.
(i) Reestimate the labor supply function in Example 16.5, using log(hours) as the dependent variable. Compare the estimated elasticity (which is now constant) to the estimate obtained from equation (16.24) at the average hours worked.
(ii) In the labor supply equation from part (i), allow educ to be endogenous because of omitted ability. Use motheduc and fatheduc as IVs for educ. Remember, you now have two endogenous variables in the equation.
(iii) Test the over identifying restrictions in the 2SLS estimation from part (ii). Do the IVs pass the test?

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