Suppose that a​ worker’s productivity at manufacturing firms​ (prod) depends on two​ factors, hours of training​ (train) and​ worker’s efficiency. prod = a + b 1 *train + b 2 *efficiency + u Assume...


Suppose that a​ worker’s productivity at manufacturing firms​ (prod) depends on two​ factors, hours of training​ (train) and​ worker’s efficiency.


prod = a + b1
*train + b2
*efficiency + u


Assume that this equation satisfies the​ Gauss-Markov assumptions. If less efficient workers tend to be required to take​ on-job-training, what is the likely bias in the estimated coefficient of train from the simple regression of prod on train​? (i.e. is it under or overestimated) Please explain your answer.




Jun 08, 2022
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