Hausman Test For Endogeneity: Parents Education as IV for Offspring Education-Transmission of Inate Ability

Variables in a regression can be endogenous for several reasons including omitted variable biased, measurement error and simultaneity / reverse causation. One example from the previous post was that of unobserved ability in the determination of wages. Since unobserved ability is omitted from a regression of the impact of wages on income it is possible … More Hausman Test For Endogeneity: Parents Education as IV for Offspring Education-Transmission of Inate Ability