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Consider a family saving function for the population of all families in the United States:
sav = β0 + β1inc + β2hhsize + β3educ + β4age + u
where hhsize is household size, educ is years of education of the household head, and age is the the age of the household head. Suppose our sample includes only married couples without children. Can we estimate all of the parameters in the saving equation? Which ones can we estimate?
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Since 1990, real income has increased rapidly , yet the average number of children per family has decline ." Three possible explanations for this process are given below.
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