Idea about lhourpay and lhrrate
We are not clear about what is the relationship of "lhourpay" and the regression of "lhrrate" on covariates. For example, if "lhourpay" is included in to the regression, Is is endogenous?
One thing we can be sure of is that "lhourpay" is "lhrrate" + mesurement errors! Can this help explaning anything?