22. In this regression, I look at the determinants of years of schooling S for a respondent as a function of the following: an intelligence score (ASVABC); mother's years of schooling (SM; father's years of schooling (SF; a FEMALE dummy variable = 1 if female, race dummy variables where there are only 3 ethnicities listed in the data: ETHWHITE, ETHBLAC, ETHHISP; an interaction term FEMBLACK where (FEMALE ETHBLAC), and another interaction term FEMHISP where (FEMALE ETHHISP).
I also do an additional test to determine the importance of adding the parents' schooling. The results are attached.
QUESTION: Look at the t-statistics on parents years of schooling SM and SF and the relevant F statistic to test the significance of these parental variables. What is the most likely reason that these tests lead to different conclusions regarding statistical significance of the parental variables?
A. An F test indicates that the regression is not valid at a=5%.
B. The R-squared is low indicating that the regression has a poor fit and little explanatory power
C. There is multicollinearity because SM and SF are likely to be correlated.
D. There is an omitted variables bias.
C. There is multicollinearity because SM and SF are likely to be correlated.
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