Suppose an economist is trying to determine the following model: Ln wage = β0 + β1education + u. According to the economist, the error term includes 'ability,' an unobserved explanatory variable, which is correlated with education. He then seeks to find another variable for this model such that this new variable is uncorrelated with ability but correlated with education. What type of variable is the economist employing in estimating this model?

MCQs on Econometrics, which is the use of statistical methods to develop theories or test existing hypotheses in economics or finance.