ECO327Y5 Study Guide - Midterm Guide: Linear Probability Model, And1, Truncated Regression Model
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17. 6 (i) ols will be unbiased, because we are choosing the sample on the basis of an exogenous explanatory variable. But, in the subpopulation of married people without children, hhsize = 2. Because there is no variation in hhsize in the subpopulation, we would not be able to estimate 2; effectively, the intercept in the subpopulation becomes 0 + 2 2, and that is all we can estimate. But, assuming there is variation in inc, educ, and age among married people without children (and that we have a sufficiently varied sample from this subpopulation), we can still estimate 1, 3, and 4. Ols to be biased and inconsistent for estimating the j in the population model. We should instead use a truncated regression model. C17. 3 (i) out of 616 workers, 172, or about 18%, have zero pension benefits. For the 444 workers reporting positive pension benefits, the range is from . 28 to ,880. 27.
