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?