Dropout equation - unemployment variable, Econometrics

Consider the following equations designed to estimate  a school's test scores (Test) and the school's dropout rate (Drop).

Testi = B0 + B1*Parent Edi + B2*school qualityi + B3*Dropi + Ei

Dropi = a0 + a1*Parent Edi + a2*school qualityi + a3*Testi + Vi

a. Use the order condition to determine if these equations are exactly identified, under-identified, or over-identified (the intuitive version is fine).

b. Suppose another variable (teenage unemployment) is available and is thought to affect dropout rates but not test scores. How will your answer to part (a) change if this unemployment variable is included in the dropout equation?

c. Explain intuitively why OLS will be biased if the equations are estimated separately.

Posted Date: 2/18/2013 12:11:29 AM | Location : United States







Related Discussions:- Dropout equation - unemployment variable, Assignment Help, Ask Question on Dropout equation - unemployment variable, Get Answer, Expert's Help, Dropout equation - unemployment variable Discussions

Write discussion on Dropout equation - unemployment variable
Your posts are moderated
Related Questions
The following table gives data on the Consumer Price Index (CPI) and the Standard & Poor (S&P) company''s index of 500 common stock prices. Year CPI Index S&P 500 Index 1978 65.2 9


Hello I am a PostGrad student. Need some help in the coursework

compare the price elasticity of demand on two parallel demand curves for a given price and for a given quantity

The  firm  is  considering  manufacturing  a  second  product  in  its  factory alongside the first. The demand functions for the two products are: Q d1 =180 - 4P 1 Q d2 =90

Consider the following equations designed to estimate  a school's test scores (Test) and the school's dropout rate (Drop). Test i = B 0 + B 1 *Parent Ed i + B 2 *school quali

Problem: (a) Write down the equation for symmetric GARCH and clearly explain its components. (b) Explain the term ‘volatility clustering'. (c) How would you model leverag

Brie?y describe the preference reversal phenomenon, and explain how Grether and Plott's (1979) experimental design deals with anchoring as one of its possible causes. Using a dr


Currently the stock of Backstreet Toys (BT) is selling for $20 per share and the risk free rate is5%. a) Draw a payoff diagram for each of the following 3 portfolios: i. Buy