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.