This question assumes that you have access to a statistical package the computes standard...

This question assumes that you have access to a statistical package the computes standard errors robust to arbitrary serial correlation and heteroskedasticity for panel data methods.

(i) For the pooled OLS estimates in Table, obtain the standard errors that allow for arbitrary serial correlation (in the composite errors, vit = ai + uit) and het-eroskedasticity. How do the robust standard errors for educ, married, and union compare with the nonrobust ones?

(ii) Now obtain the robust standard errors for the fixed effects estimates that allow arbitrary serial correlation and heteroskedasticity in the idiosyncratic errors, uit. How do these compare with the nonrobust FE standard errors?

(iii) For which method, pooled OLS or FE, is adjusting the standard errors for serial correlation more important? Why?

Table Fixed Effects Estimation of Scrap Rate Equation