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(Solved): Consider the following model: Yi=0+1Eduationi+2Experiencei+ui. ...


Consider the following model: \[ Y_{i}=\beta_{0}+\beta_{1} \text { Eduation }_{i}+\beta_{2} \text { Experience }_{i}+u_{i} .

Consider the following model: Suppose you leave out the years of experience variable. What kinds of problems or biases would you expect? Explain verbally (in case there is a bias, determine its sign).


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ANSWER If the variable Experience is left out or omitted from the model , the regression model of Income on Education only would have omitted variabl
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