Question: Can the regression that you suggested in response to given problem be used to estimate the effect of gender on an individual's earnings? Can that regression be used to estimate the effect of the national unemployment rate on an individual's earnings? Explain.
Problem: A researcher is using a panel data set on n = 1000 workers over T- 10 years (from 2001 through 2010) that contains the workers' earnings, gen-der, education, and age. The researcher is interested in the effect of education on earnings. Give some examples of unobserved person-specific variables that are correlated with both education and earnings. Can you think of examples of time-specific variables that might be correlated with education and earnings? How would you control for these person-specific and time-specific effects in a panel data regression?