Econometrics calculations
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THE ATTACHED DOCUMENT HAS THE TABLE
a. Compute E(Y ).
b. The unemployment rate is the fraction of the labor force that is unemployed. Show that the unemployment rate is given by 1-E(Y ).
c. Calculate E(Y|X = 1) and E(Y |X = 0)
e. A randomly selected member of this population reports being unemployed. What is the probability
that this work is a college graduate? A non-college graduate?
f. Are education achievement and employment status independent? Explain.
g. find the covariance and correlation of X and Y
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This solution helps with a problem involving probability distribution in econometrics.
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Table 1: Joint Distribution of Employment status and College Graduation in the U.S. Population Aged 25-64, 1990
Unemployed (Y = 0) Employed (Y = 1) Total
Non-college grads (X=0) 0.045 0.709 0.754
College grads (X=1) 0.005 0.241 0.246
Total 0.050 0.950 1.000
a. Compute E(Y ).
Lets denote joint probability distribution by Pj
E(Y) = [0 * Pj(Y=0) ] + [1 * Pj(Y=1)]
= (0 * 0.050) + (1* 0.950)
= 0.950
b. The unemployment rate is the fraction of the labor force that is unemployed. Show that the unemployment rate is given by 1-E(Y ...
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