Question

Use the data set WAGE2.dta to estimate the following model: log (wage) = β0 + β1educ + β2exper + β3tenure + β4married + β5south + β6urban + β7black + β8IQ + u (a) Use the variable KWW (the "knowledge of the world of work" test score) as a proxy for ability in place of IQ. What is the estimated return to education in this case? (b) Now, use IQ and KWW together as proxy variables. What happens to the estimated return to education? (c) In part (b), are IQ and KWW individuall significant? Are they jointly significant?

Answer 1

Answer

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Explanation  

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