# Estimating causal effect for educated people on wages

I have a problem regarding causation and effect. I have a linear model $wage=\beta_0+\beta_1educ+\beta_2female+\beta_3hourseworked+errorterm$ When I need to estimate the causal effect for educated people on wages, I have chosen a subpopulation educ==1 (educated people) and made a regression in stata. The used commands are reg wages educ female hourseworked

From this regression I obtain 0 for the educated people, and it says that it is omitted. How can I find the causal effect of educated people on wages, when I have this problem?

I have tried to remove the intercept, from which I get an estimate causal effect of education, but is it correct just to remove the intercept?

Do I have to think about endogeneity - omitted variables - instruments?

• You run a regression on only the sub-population with education =1? Doesn't that mean that you have no variation in education in the resulting regression? – BKay Jan 23 '16 at 16:11
• That is exactly what it means. There is absolutely no variability in that regressor- basically making it a constant. Your regression is conditioning on the fact that people are educated – ChinG Jan 23 '16 at 16:49