Question 3. Please submit your R script alongside your answers Data can be found

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Question 3. Please submit your R script alongside your answers Data can be found at:

https://wps.pearsoned.com/aw_stock_ie_3/178/45691/11696965.cw/ index.html

In April 2008 the unemployment rate in the United States stood at 5.0%. By April 2009 it had increased to 9%, and it had increased further, to 10.0%, by October 2009. Were some groups of workers more likely to lose their jobs than others during the Great Recession? For example, were young workers more likely to lose their jobs than middle-aged workers? What about workers with a college degree versus those without a degree, or women versus men? On the website, you will find the data file Employment 08 09, which con- tains a random sample of 5440 workers who were surveyed in April 2008 and reported that they were employed full time. A detailed description is given in Employment 08 09 Description, available on the website. These workers were surveyed one year later, in April 2009, and asked about their employ- ment status (employed, unemployed, or out of the labor force). The data set also includes various demographic measures for each individual. Use these data to answer the following questions.

a. What fraction of workers in the sample were employed in April 2009? Use your answer to compute 95% confidence interval for the probability that a worker was employed in April 2009, conditional on being employed in April 2008.

b. Regress Employed on Age and Age2, using a linear probability model.
i. Based on this regression, was age a statistically significant determinant of employment in April 2009?
ii. Is there evidence of a nonlinear effect of age on the probability of being employed?
iii. Compute the predicted probability of employment for a 20-year-old worker, a 40-year-old worker, and a 60-year-old worker.
c. Repeat (b) using a probit regression.
d. Repeat (b) using a logit regression.
e. Are there important differences in your answers to (b)-(d)? Explain.
f. The results in (a)-(f) were based on the probability of employment. Work- ers who are not employed can either be (i) unemployed or (ii) out of the labor force. Do the conclusions you reached in (a)-(f) also hold for workers who became unemployed? (Hint: use the binary variable Unemployed instead of Employed)

Data can be found at:

https://wps.pearsoned.com/aw_stock_ie_3/178/45691/11696965.cw/ index.html

Explanation / Answer

95% confidence interval for probability-the critical value for a 95% confidence interval is 1.96 where 1-0.95/2=0.025

it does not mean that for a given realized interval there is a 95% probabiliity that the population parameter lies within the interval.

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