*
* Example 5.4 from pp 137-141
*
open data schooling.asc
data(format=free,org=columns) 1 3010 $
 smsa66 smsa76 nearc2 nearc4 nearc4a nearc4b ed76 ed66 age76 daded $
 nodaded momed nomomed momdad14 sinmom14 step14 south66 south76 $
 lwage76 famed black wage76 enroll76 kww iqscore mar76 libcrd14 $
 exp76 exp762
*
set age762 = age76**2
*
linreg(title="Wage Equation by OLS") lwage76
# constant ed76 exp76 exp762 black smsa76 south76
*
linreg(title="Reduced Form for Schooling. Estimated by OLS") ed76
# constant age76 age762 black smsa76 south76 nearc4
*
* To do the IV estimates, we use the INSTRUMENTS instruction to list the full set
* of instruments. These are the explanatory variables we assume are exogenous
* (constant and the dummies) and the three instruments that we've chosen for the
* experience variables and schooling.
*
instruments constant age76 age762 black smsa76 south76 nearc4
linreg(title="Wage Equation Estimated by IV",inst) lwage76
# constant ed76 exp76 exp762 black smsa76 south76