Economics and Quantitative Analysis - Assignment
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Added on 2020-05-16
Economics and Quantitative Analysis - Assignment
Added on 2020-05-16
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Running Head: ECONOMICS AND QUANTITATIVE ANALYSISEconomics and Quantitative AnalysisName of the StudentName of the UniversityAuthor note
ECONOMICS AND QUANTITATIVE ANALYSIS1Table of Contents1. Purpose...................................................................................................................................22. Background............................................................................................................................23. Method...................................................................................................................................34. Results....................................................................................................................................34.1 Descriptive Statistics........................................................................................................34.2 Scatter diagram.................................................................................................................44.3 Regression estimate..........................................................................................................54.4 Goodness of fit.................................................................................................................64.5 Predicted wage.................................................................................................................65. Discussion..............................................................................................................................76. Recommendation....................................................................................................................87. References..............................................................................................................................9
ECONOMICS AND QUANTITATIVE ANALYSIS21. PurposeThe report aims to find out how education is related with wage level. There can beboth way relation between education and wage. High education generally means a high wage.Similarly, higher wage by raising income make education affordable for worker. The reportevaluates the impact of education on wage level using linear regression relationship. Basedon the relationship between education and wage suitable policy recommendation can bedeveloped. 2. Background Different strategies are taken to stimulate capacity of the individual to succeed inlabor market. Making investment to enrich human capital is one of the important tool to attainthis objective. Several studies have conducted to validate the relationship between wage andeducation. Education is the only tool that can enhance a complete development of mind andshape physical and moral characters. Education helps to gather knowledge, which in turncontributes to develop technical skills and enhances productivity. The intellectual skillsattained through education is reflected in the work in which the workers engage (Barros andRamos 2015). The formal education forms the basis of any technical or skill education.Education combines with individual ability makes an individual eligible for a standard job. Wage is the payment made against the work effort given by the workers. Wageusually depends on the productivity of workers. Workers will high skills are highlyproductive. By exploring their productive capacity, they yield a high return to the employersin the form of high output. Wage in general is determined from the equilibrium in labormarket where labor supply and labor demand balances. Employers always want to have askilled workforce and for this, they often offer wage above equilibrium called the efficiency
ECONOMICS AND QUANTITATIVE ANALYSIS3wage (Andini 2017). Therefore, in general a direct positive relation exists between educationand income. Based on the assertion that education positively influence wage, economists havemade research to evaluate the proposed relation (Smith and Fernandez 2017). Evaluation ofwage-education relation attracts attention of the researchers to make any policy suggestion inthis aspect. 3. MethodThe variables taken for analysis are wage and education. A sample of size 100 aretaken to estimate the relationship between wage and education. A continuous data is collectedon wage while the data on education is discrete in nature. The objective of this paper is findthe association between education and wage. Before estimating relationship between the twovariables, a descriptive analysis is made. The descriptive analysis shows mean, standarddeviation, maximum, minimum and other relevant variables. Then a scatter diagram isconstructed to evaluate relationship between the two quantitative variables at a glance. Therelationship depicted with scatter plots needs statistical confirmation. A regression model isdeveloped using wage as dependent variable and education as independent variable (Fox2015). The regression output gives an estimated relationship between the variables in termsof statistical significance. The goodness of fit of the model is to be determined from the Rsquare measure. Finally, the estimated model is used to predict wage for the given level ofeducation. 4. Results4.1 Descriptive Statistics Descriptive Statistics wageeducMean22.31Mean13.7
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