Suppose you are interested in studying the relationship between education and wa

Question

Suppose you are interested in studying the relationship between education and wage. More specifically, suppose that you believe the relationship to be captured by the following linear regression model Wage o B,Education+u Suppose further that the only unobservable that can possibly affect both wage and education is intelligence of the individual OLS assumption (1): The conditional distribution of u, given X, has a mean of zero. Mathematically, E(uiDG) =0 Which of the following provides evidence in favor of OLS assumption #17 (Check all that apply) A. covariance(Inteligence, Education) #0. [ ] B. E(Intelligencel Education-x)= E(Intelligencel Education = y) for all xy. C. [-] D. corr(Intelligence, Education)#0. corr(Intelligence. Education,-0.

Explanation / Answer

Assumption no -1 for Ordinal least square regression is

"ThThe linear model is linear in parameters"

It means there is non zero Correlation between intelligence & education

i.e cor(intelligence, education) >0 or <0

Answer is " C"

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