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You are given the data in Table 2.7 for the United States for years 1980–2006.
a. Plot the male civilian labor force participation rate against male civilian unemployment rate. Eyeball a regression line through the scatter points. A priori, what is the expected relationship between the two and what is the underlying economic theory? Does the scattergram support the theory?
b. Repeat (a) for females.
c. Now plot both the male and female labor participation rates against average hourly earnings (in 1982 dollars). (You may use separate diagrams.) Now what do you find? And how would you rationalize your finding?
d. Can you plot the labor force participation rate against the unemployment rate and the average hourly earnings simultaneously? If not, how would you verbalize the relationship among the three variables?