Answered step by step
Verified Expert Solution
Question
1 Approved Answer
These two statements are true or false? 1. One solution to the issue of omitted variable bias is to use the method of two-stage least
These two statements are true or false?
1. One solution to the issue of omitted variable bias is to use the method of two-stage least squares with an instrumental variable that satisfies the instrument relevance condition and the exclusion restriction.
2. Say you want to estimate the effect of schooling on wages using the method of two-stage least squares. Then the instrument exogeneity condition implies that the correlation between the instrumental variable and schooling should be zero.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started