Introductory Econometrics 4th Edition by Jeffrey Wooldridge

تمرين 8

Suppose that average worker productivity at manufacturing firms (avgprod) depends on two factors, average hours of training (avgtrain) and average worker ability (avgabil):
avgprod = 0 + 1 avgtrain + 2 avgabil + u.
Assume that this equation satisfies the Gauss-Markov assumptions. If grants have been given to firms whose workers have less than average ability, so that avgtrain and avgabil are negatively correlated, what is the likely bias in 1 obtained from the simple regression of avgprod on avgtrain