- Consider The Following Regression Results Un Unemployment Rate V Job Vacancy Rate D 1 For Period Beginning 1 (20.92 KiB) Viewed 48 times
V = job vacancy rate, %
D = 1, for period beginning in the 4th quarter
1966
D = 0, for period before the
4th quarter 1966
t = time, measured in quarters.
Note: In the fourth quarter of 1966, the then Labor
government liberalized the National Insurance Act by replacing the
flat-rate system of short-term unemployment benefits by a mixed
system of flat-rate and (previous) earnings-related benefits, which
increased the level of unemployment benefits.
a) What are your prior expectations about the relationship
between the unemployment and vacancy rates?
b) Holding the job vacancy rate constant, what is the average
unemployment rate in the period beginning in the fourth quarter of
1966? Is it statistically different from the period before 1966
fourth quarter? How do you know?
c) Are the slopes in the pre- and post-1966 fourth quarter
statistically different? How do you know?
d) Is it safe to conclude from this study that generous
unemployment benefits lead to higher unemployment rates? Does this
make economic sense?
UN = 2.7491+ 1.1507D, - 1.5294V, - 0.8511(D,V₂) t = (26.896) (3.6288) (-12.5552) (-1.9819) R² = 0.9128