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3. Bin the following wage equation measures the causal effect of education on wage. (3pts) wage = P + B,education + w A. Yes.

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Answer #1

Answer:

In the equation: wage = β0 + β1education + u

The correct answer is A. Yes.

β1 gives the size of the casual effect of education that variable is having on dependent variable.

β1 measures the increase in wage per unit increase in the education.

change in wages P1 = change in education wages education

β1 indicates that one more year of education increase, hence it measures the casual effect of education on wage.

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