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
Effective Human Resources Management Depends Upon Sound Reward System Essays and Term Papers


what is the importance of price

Problem 1. Consider the demand function Q(p 1 , p 2 , y) = p 1 -2 p 2 y 3 , where Q is the demand for good 1, p 1 is the price of good 1, p 2 is the price of good 2 and y is t


A store is known for is bargains. The store has the habit of lowering the price of its bargains each day, to ensure that articles are sold fast. Assume that you spot an item on Wed



Probelm: (a) Differentiate between homoscedasticity and heteroscedasticity. (b) Outline the reasons why the variances of disturbance term may vary. (c) Given the 3 observ

A city government wants to raise $3 million by issuing bonds. By ballot proposition, the bond's coupon interest rate was set at 8% per year with semiannual payments. However, marke