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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.

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