The OLS Slope Estimator Is Not Defined If There Is

question 52

Essay

The OLS slope estimator is not defined if there is no variation in the data for the explanatory variable. You are interested in estimating a regression relating earnings to years of schooling. Imagine that you had collected data on earnings for different individuals, but that all these individuals had completed a college education (16 years of education). Sketch what the data would look like and explain intuitively why the OLS coefficient does not exist in this situation.

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Definitions:

FASB Accounting Standards Codification

The authoritative source of generally accepted accounting principles (GAAP) for public and private companies, established by the Financial Accounting Standards Board (FASB).

Health Care Entities

Organizations involved in the provision of health care services such as hospitals, clinics, and nursing homes.

Statement of Activities

A financial report that shows all revenue and expenses for a specific period, often used by nonprofit organizations.