IV Estimates of the Returns to Schoofmg. We might be worried that unobserved ability is an important determinant of earnings and that ability is correlated with the level of schooling. i. Explain (intuitively) the effect of ability bias on the OILS estimate of the return to schooling. ii. One solution to this problem is to use an instrumental variable. Which two conditions must an instrument satisfy for its use to lead to an unbiased estimate of the return to schooling? iii. Some researchers proposed using a dummy variable for whether the individual grew up near a 4-year college (neared in the data set} as an instrument. Why might this be a good instrument for the level of schooling? iv. As experience and its square also depend on schooling, we need to instrument these variables as well. Researchers proposed using age and its square. What do you think of this idea