The Use of Linear Regression in Labour Economics
While econometric techniques have become increasingly sophisticated, regression analysis in one form or another continues to be a major tool in empirical studies. Linear regression is also important in the way it serves as a reference for other techniques — it is usually the failure of the conditions that justify the application of linear regression that give rise to alternative methods. Furthermore, many more complicated techniques often contain elements of linear regression or modifications of it. This chapter discusses the use of linear regression and related methods in labour economics. It begins with a review of some useful results on the linear regression model. It then covers specification issues in the linear model and the Mincer earnings equation.
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