Question
Endogenity is associated with which of the following
?Solution
Endogeneity occurs when a predictor variable (x) in a regression model is correlated with the error term (e) in the model. This can occur under a variety of conditions, but two cases are especially common in inequality research: (1) when important variables are omitted from the model (called āomitted variable biasā) and (2) when the outcome variable is a predictor of x and not simply a response to x (called āsimultaneity biasā)
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