E9.1 Use the data set CPS12, described in Empirical Exercise 8.2, to answer the following questions.

a. Discuss the internal validity of the regressions that you used to answer Empirical Exercise 8.2(l). Include a discussion of possible omitted variable bias, misspecification of the functional form of the regression, errors in variables, sample selection, simultaneous causality, and inconsistency of the OLS standard errors.

b. The data set CPS92_12 described in Empirical Exercise 3.1 includes data from 2012 and 1992. Use these data to investigate the (temporal)

external validity of the conclusions that you reached in Empirical Exercise 8.2(l). [Note: Remember to adjust for inflation, as explained in Empirical Exercise 3.1(b).]