# 5.4. Use the data in CARD.RAW for this problem. a. Estimate a log ð wage Þ equation by OLS with…

### Question Description:

5.4. Use the data in CARD.RAW for this problem. a. Estimate a log ð wage Þ equation by OLS with… 1 answer below » 5.4. Use the data in CARD.RAW for this problem. a. Estimate a logð wage Þ equation by OLS with educ , exper , exper 2, black , south , smsa , reg661 through reg668 , and smsa66 as explanatory variables. Compare your results with Table 2, Column (2) in Card (1995). b. Estimate a reduced form equation for educ containing all explanatory variables from part a and the dummy variable nearc4 . Do educ and nearc4 have a practically and statistically signiﬁcant partial correlation? [See also Table 3, Column (1) in Card (1995).] c.& View complete question » 5.4. Use the data in CARD.RAW for this problem. a. Estimate a logð wage Þ equation by OLS with educ , exper , exper 2, black , south , smsa , reg661 through reg668 , and smsa66 as explanatory variables. Compare your results with Table 2, Column (2) in Card (1995). b. Estimate a reduced form equation for educ containing all explanatory variables from part a and the dummy variable nearc4 . Do educ and nearc4 have a practically and statistically signiﬁcant partial correlation? [See also Table 3, Column (1) in Card (1995).] c. Estimate the logð wage Þ equation by IV, using nearc4 as an instrument for educ . Compare the 95 percent conﬁdence interval for the return to education with that obtained from part a. [See also Table 3, Column (5) in Card (1995).] d. Now use nearc2 along with nearc4 as instruments for educ . First estimate the reduced form for educ , and comment on whether nearc2 or nearc4 is more strongly related to educ . How do the 2SLS estimates compare with the earlier estimates? e. For a subset of the men in the sample, IQ score is available. Regress iq on nearc4 . Is IQ score uncorrelated with nearc4 ? f. Now regress iq on nearc4 along with smsa66 , reg661 , reg662 , and reg669 . Are iq and nearc4 partially correlated? What do you conclude about the importance of controlling for the 1966 location and regional dummies in the logð wage Þ equation when using nearc4 as an IV for educ ? View less » Jan 11 2016 03:13 PM