You own a chain of retail stores and are interested in the impact of training yo

Question

You own a chain of retail stores and are interested in the impact of training your sales associates on sales. You have the following data for n stores over T years, say n=200 and T=4: You don't have any data on field store attributes. All stores had the same store manager and didn't go through any renovations during the four years. Consider the following regression model. sales_it = alpha_i + lambda_t + beta_t training_it + beta_2 customers_it + beta_3 staf f _it + mu_it Suppose that store managers decide whether their sales associates receive training or not in a given year. What aspect of the above regression model accounts for this selection? Explain your answer. During the four years, there was a major recession in the U.S., where all the stores are located. What aspect of the above regression model ensures that this doesn't bias the estimates of the effect of training? Explain your answer. What if we accidently lost the first three years' observations, and we estimate the following model using the OLS regression: sales_i = alpha + beta_1 training_i + beta_2 customers_i + beta_3 staf f_i + mu_i Given the assumption listed in part (a) is still valid, will the OLS estimator of beta_1, be unbiased? Please explain why.

Explanation / Answer

a)

here 1 is associated training

1 will accounts for this selection

b)

recession doesn't having any special function hence it will be associated with constentt values i and uit

c)

yes it will be

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