How would you rationalize your ?nding

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You are given the data in Table 2.7 for the United States for years 1980-1996.

TABLE 2.7     LABOR FORCE PARTICIPATION DATA

Year

CLFPRM1

CLFPRF2

UNRM3

UNRF4

AHE825

AHE6

1980

77.4

51.5

6.9

7.4

7.78

6.66

1981

77.0

52.1

7.4

7.9

7.69

7.25

1982

76.6

52.6

9.9

9.4

7.68

7.68

1983

76.4

53.9

9.9

9.2

7.79

8.02

1984

76.4

53.6

7.4

7.6

7.80

8.32

1985

76.3

54.5

7.0

7.4

7.77

8.57

1986

76.3

55.3

6.9

7.1

7.81

8.76

1987

76.2

56.0

6.2

6.2

7.73

8.98

1988

76.2

56.6

5.5

5.6

7.69

9.28

1989

76.4

57.4

5.2

5.4

7.64

9.66

1990

76.4

57.5

5.7

5.5

7.52

10.01

1991

75.8

57.4

7.2

6.4

7.45

10.32

1992

75.8

57.8

7.9

7.0

7.41

10.57

1993

75.4

57.9

7.2

6.6

7.39

10.83

1994

75.1

58.8

6.2

6.0

7.40

11.12

1995

75.0

58.9

5.6

5.6

7.40

11.44

1996

74.9

59.3

5.4

5.4

7.43

11.82

 

a. Plot the male civilian labor force participation rate against male civil- ian 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 part 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 dia- grams.) Now what do you ?nd? And how would you rationalize your ?nding?

d. Can you plot the labor force participation rate against the unemploy- ment rate and the average hourly earnings simultaneously? If not, how would you verbalize the relationship among the three variables?

Reference no: EM13882204

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