The following model allows the return to education to depend upon the total amount of both parents’ education, called pareduc: log(wage)=β0+β1educ +β2educ·pareduc +β3exper +β4tenure+u❑
a) What is the return to another year of education in this model?
Holding all other factors fixed we have
∆ log(wage)=β1∆ educ+ β2∆ educ·pareduc=(β1+β2· pareduc)∆ educ
Dividing both sides by ∆ educ gives the result (β1+β2· pareduc)
b) What sign do you expect for β2? Why

The stock of grommet corporation, a u.s. company, is publicly traded, with no single shareholder owning more than 5 percent of its outstanding stock. grommet owns 95 percent of the outstanding stock of staple inc., also a u.s. company. staple owns 100 percent of the outstanding stock of clip corporation, a canadian company. grommet and clip each own 50 percent of the outstanding stock of fastener inc., a u.s. company. grommet and staple each own 50 percent of the outstanding stock of binder corporation, a u.s. company. which of these corporations form an affiliated group eligible to file a consolidated tax return?