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You are an economic consultant whose task is to investigate whether there is gender discrimination with respect to earnings in the government of Little Rock. You take a random sample of 22 people of which 10 are women and 12 are men. The earnings of women are $25,000 a year and the earnings of men are $26,000 a year. The variance for the earnings of men is $3000, and the variance for the earnings of women is $2500.
(A) Based on what you collected, test if the earnings of men and women are equal at the 1% significance level. Set up the null hypothesis/alternative hypothesis. Show your test statistic, critical statistic and your conclusion. How many degrees of freedom do you have?
(B) Based on your results what can you say about gender discrimination? Is this the causal evidence of gender on earnings? Why or Why not?
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