Does It Pay to Stay in School? Refer to your work in Exercise 24 for Exercises 57 and 58.

Question 4.258

57. Answer the following:

  1. Which data value has the largest residual? Describe what is unusual about this observation.
  2. Suppose a public figure stated that 50% of the variability in the unemployment rate was due to competition from abroad. How would you use the regression results to respond to this claim?
  3. Suppose a politician claimed that using the years of education alone could allow us to predict the unemployment rate to within 1%. How would you use the regression results to respond to this claim?
  4. Suppose a newspaper claimed that each additional year of education brought down the unemployment rate by “more than 1%.” How would you use the regression results to either support or refute this claim?

4.3.57

(a) years of education;  unemployment rate. It doesn't follow the trend of the higher the number of years of education, the lower the unemployment rate. (b) Since , 68.24% of the variability in the variable and . Hence the statement is not true. (c) Since the absolute values of the residuals for 5, 10, and 16 years of education are more than 1%, this claim is not always true. (d) Since , we can say that each additional year of education drops the predicted unemployment rate by 1.24%.