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After first controlling for the effects of age, race, gender, union status, and location on earnings, suppose that a researcher estimates the rate of return to an additional year of schooling to be 8%. Note that the researcher did not control for unobserved differences in individual cognitive ability. Why is failure to control for cognitive ability among individuals in the sample a potential problem for the credibility of the researcher's estimate of the rate of return to schooling?

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Operation Management, Management Studies

Category:- Operation Management
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