WebJul 18, 2016 · For example, I want the DGP (data generating process) is something like: Wages_ {it}= \beta (Labor market experience_ {it}) + \alpha_ {i} + \epsilon_ {it}, where \alpha_ {i} is the unobserved heterogeneity and where \epsilon_ {it} is the error term which is normally distributed. WebJan 3, 2024 · Whatever has produced the data has a precise form, not a hand wavy error term. What we call error is just variation that we can't explain. a) Given knowledge of the …
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