Suppose that the claim is made that 'wages increase with age'. You know that people tend to get...

Question:

Suppose that the claim is made that 'wages increase with age'. You know that people tend to get higher wages the longer they have worked within the same firm. Not controlling for this 'tenure effect' directly, an estimate of the effect of age on wages:

a) will be biased upward because tenure and age are positively correlated.

b) will be biased downward because tenure and age are positively correlated.

c) will be biased upward because tenure and age are negatively correlated.

d) will be biased downward because tenure and age are negatively correlated.

e) will not be biased.

Regressions:

The most common regression types you will see in economics are the ordinary least squares and logistic regression. The OLS is applicable in more cases than the logistic regression and thus it is useful to spend some time learning how it works.

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Answer: A

If you do not control for tenure and just include age, much of the signal that is associated with tenure will be put into age. This is...

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Regression Analysis: Definition & Examples

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Chapter 21 / Lesson 4
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Regression analysis is used in graph analysis to help make informed predictions on a bunch of data. With examples, explore the definition of regression analysis and the importance of finding the best equation and using outliers when gathering data.


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