Question
I am confused the assignment 5, can you give me some solution about the assignment 2. Consider the wage-schooling loci below for Adam and Ben,
I am confused the assignment 5, can you give me some solution about the assignment
2. Consider the wage-schooling loci below for Adam and Ben, A and B respectively. The variable EDU measures the number of years for educational attainment. Let's assume that Adam drops out of high school after 10 years of schooling and that Ben finishes high school after 12 years of schooling. We also assume that neither Adam nor Ben pursue any further education.
a)Compute the observed annual wage premium associated with a high school diploma. (5 points)
b)Explain in one short paragraph why the observed wage premium may overestimate the effect of high school diploma in earnings. (7.5 points)
c)Compute an unbiased annual wage premium associated with a high school diploma. Explain your solution in detail, step by step. (10 points)
d)Explain in one short paragraph, how one may obtain an unbiased estimation of the wage premium associated with a high school diploma working with observed data (like part a) or, alternatively, working with experimental data. (7.5 points)
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