In the following econometric model, wage = β₀+ β₁educ + u , which of the following factors would not be contained in the term u ? A)Experience (exper) B)Family background (fback) C)Innate ability (abil) D)Education (educ)

Question

Quizplus · Accepted Answer

The term $u$ in an econometric model typically represents the error term, which includes all factors affecting the dependent variable (in this case, wage) that are not explicitly included as independent variables in the model. Since education (educ) is explicitly included in the model as an independent variable ($\beta_{1}educ$), it would not be part of the error term $u$.

In the Following Econometric Model, Wage = β0+ β1educ

In the Following Econometric Model, Wage = β₀+ β₁educ