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wage = b 0 + b 1 educ + b 2 exper + b 3 expersq + b 4 female + b 5 married + u

u

V ar(u|educ, exper, female, married) = var(u|female) = c 0 + c 1 female

c 0 c 0 + c 1 u

lsalary =b 0 + b 1 years + b 2 gamesyr + b 3 bavg + b 4 hrunsyr + b 5 rbisyr + b 6 allstar+ b 7 black + b 8 hispan

rsp500 i3 pcip rsp500

rsp500 t = b 0 + b 1 pcip t + b 2 i3 t + u t

u t = ρu t1 + e t

ρ e t e t e t ρ