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(4.5) You built a linear regression model to analyze annual salaries for a developed country. You (4) incorporated two independent variables, age and experience,
(4.5) You built a linear regression model to analyze annual salaries for a developed country. You (4) incorporated two independent variables, age and experience, into your model. Upon reading the regression results, you notice that the coefficient of experience is negative, which ap- pears to be counter-intuitive. In addition you have discovered that the coefficients have low t-statistics but the regression model has a high R2. What is the most likely cause for these results? Justify your answer. Multicollinearity A. B. Serial correlation C. Heteroskedasticity D. Incorrect standard errors [20]
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