3. The estimation of a labour demand for Barbados over the period 1970 to 1996 yields: l^t=0.3040.143wrt+0.734gdpt+0.0003nistR2=0.917D.W.=0.742RSS=0.0225F=84.715 Var(^)=0.25650.00720.00460.04520.00100.00810.00840.00020.00170.0005 where l : natural logarithm of total employment wr : natural logarithm of real wage index gdp:natural logarithm of real gross domestic product nis: natural logarithm of index of contribution of employers to national insurance t : time index RSS : residual sums of squares a) Evaluate the statistical significance of the results. Use =5% throughout. 10 marks b) A regression of l, on the original regressors, l^t2 and a constant term yields the following statistics: R2=0.950687 and RSS=0.013347. Conduct a relevant test for omitted variables. Note that the coefficient of l^t2 has a t-statistic of 3.876. c) A researcher argues that wr, is endogenous. Indicate a test statistic to evaluate his position, explain how to implement the test and provide the consequences of endogeneity. 5 marks Critical values dl(27,3)=1.16;du(27,3)=1.65;dl(26,3)=1.14;du(26,3)=1.65;t(24,0.025)=2.064;t(23,0.025)=2.069;t(22,0.025)=2.074;t(24,0.05)=1.711;t(23,0.05)=1.714;t(22,0.05)=1.717;F(3,23)=3.03;F(3,24)=3.01;F(1,23)=4.28;F(1,22)=4.30;12=3.84;22=5.99