Hi, need to submit a 2000 words essay on the topic UNDERGRAD LEVEL.Figure 1 represents the scatter diagram for the variables output per worker and working hours. In figure 1, the scatter plot suggests

Hi, need to submit a 2000 words essay on the topic UNDERGRAD LEVEL.

Figure 1 represents the scatter diagram for the variables output per worker and working hours. In figure 1, the scatter plot suggests a negative correlation between the two variables as the collection of points shows a pattern that slopes from upper right toward lower left. It implies higher values of output per worker correspond to lower values of working hours.

This negative relationship contradicts the general expectation that with increase in working hours output per worker would also rise.

Figure 2, on the other hand represents the scatter diagram for the variables output per worker and earnings of workers. In figure 2, the scatter plot does not display any kind strong correlation between the variables. However, a slight positive relation is observable from the patter of the points, although this relationship seems to be not significant. Two outliers can be detected. These outliers correspond to the years of 2005 and 2006.

To get in depth view regarding the pattern of relationships of the dependent variable, i.e. output per worker with each of the independent variables, i.e. working hours and worker’s earnings, a multiple regression can be run.

In the above equation, yt represents output per worker at period t, ht stand for working hours at period t, et stand for worker’s earnings at period t, and ut is the error term. β1 is the coefficient of the variable working hours. The sign of this coefficient represents the direction of the effect of working hours on output per worker, while its magnitude reflects the extent by which output per worker is affected by working hours. Similarly β2 is the coefficient of the variable worker’s earnings. The sign of this coefficient represents the direction of the effect of worker’s earnings on output per worker, while its magnitude reflects the extent by which output per worker is affected by working hours. (Allison, p. 41. Berk, pp.103-105)

To test this hypothesis, one needs to