**Sociology
405/805**

**Problem
Set 5**

**Due
Friday, March 10, 2000**

The following data is obtained from
Statistics Canada's 1989 Survey of
Consumer Finances. This Survey is attached to the Labour Force Survey, and uses
the same basic sampling procedures as the monthly Labour Force Survey but is
conducted only once each year. The set
of numbers here is a small subset of the data in the Survey of Consumer
Finances. The data given here represents 15 males, all living in Saskatchewan,
all having occupation teaching, all having paid employment, all household heads
between ages 30 and 60, and all having positive earnings. The particular set of 15 males shown here is
a subset of the whole set of Saskatchewan males with the above characteristics.
This subset was selected using the SAMPLE command in MINITAB. Age in years

is given in the first column and the
earnings of each male in 1988 dollars are given in the second column. The earnings refer to earnings in 1988, with
the Survey being conducted in April, 1989.

In terms of what is being examined in
this problem, one ordinarily finds a typical profile of earnings by years of
work experience. Human capital models provide some theoretical justification
for this. For working class males in
manual type jobs, the earnings profile

by years of work experience may be fairly
flat, so that beginning wages are substantial, but may increase by relatively
small amounts as the worker obtains more experience.

For males in white collar professional
types of occupations, the earnings profile may be expected to increase more
dramatically with experience. Since years of experience

is not directly measured in the Survey of
Consumer Finances, here age is being used as a proxy for years of
experience.

AGE EARNINGS

35 40257

49 40069

57 69000

55 56657

59 40000

43 41962

40 51844

57 52884

36 29434

45 40500

42 42346

44 28786

51 40446

38 45000

46 46193

1. Compute the regression line relating
earnings to age. Also compute R-squared, the standard error of estimate, the
standard deviation of b, and the t-test.
(In order to make the numbers a little more manageable, you could
convert earnings into thousands of dollars and round to one decimal).

2. Draw the scatter diagram and draw in
the regression line you compute.

3. Write a short note explaining the
above results and your conclusions, based on these statistics and tests. Comment on any shortcomings you see in the
data and methods,

possible violations of the assumptions
(page 26 of Lewis-Beck), and any suggestions concerning how the sample or
equation might be improved.