uppose we want to regress earnings on college, where college takes only two values. Suppose the correlation coefficient between college and earnings is 0.5 in a dataset. It implies that the zero conditional mean assumption is unlikely to be true. (e) (5 points) Consider a simple regression of wage on educ. Consider a null hypothesis that the coefficient on educ is zero. If the t ratio for the null hypothesis is 0.01, we can say that the true coefficient on educ is zero. Page 2