When the average difference of earnings between college graduates and high school graduates is used to estimate the “return” to a college degree, an economist would argue that the estimated return would be:
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JNU SIS 2021 Question 96: Misspecification and measurement error
Answer and worked solution
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Misspecification and measurement error has come up 11 times in 4 exams since 2011.
What this question tests
This question is on Omitted variable bias, part of Misspecification and measurement error in Econometrics.
How leaving out a relevant variable biases the estimates, and in which direction.
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Question from the JNU SIS 2021 paper. Solutions are TestStop's own. Not affiliated with or endorsed by any examination authority.