Question

1.44 The value of a fouryear degree! The big economic ne OF 2007 was a severe downturn in housing that began in mid-2006. This was followed by the financial crisis in 2008. How did these economic events affect the unem- ployment rate, and were all segments of the population affected similarly? The data are the monthly unemploy ment rates for those over 25 years of age with a high school diploma and no college and those over 25 year age with a fouryear college degree from January 1992 through December 2015. The data set is too large to print here, but here are the data for the unemploy ment rates for both groups for the first five months: UNEMPLOY Four-Year CollegeHS Degree Degree Month Only January 1992 3.1 3.2 2.9 3.2 3.2 (a) Make a time plot of the monthly unemployment 6.8 7.0 6.9 6.9 6.9 February 1992 March 1992 April 199-2 May 1992 rates for those over 25 years of age with a high school diploma and no college and those over 25 year of age with a fouryear college degree. If your software allows it, make both time plots on the same set of axes. Otherwise, make separate time plots for each group but use the same scale for both plots for ease of comparison. Are the patterns in the two

Answer 1

Ans.

1.The time series plot is given below where the blue line denotes the employment rates (Jan-May) of people over 25 having 4-year-college degree and the red dotted line indicates the employment rates (Jan-May) of people over 25 having only a High School degree.

2. The time plots in both the series are not similar if we look at the short term movement (as provided by the data). We can see that the primary difference between the 2 series is that the rate of unemployment is quite high among high school degree while the rate of unemployment is relatively very low among the college degree holders.

3. We see that while the unemployment rate has been more or less stable in the less educated section of the population, there is fluctuation in the unemployment rates in the more educated section of the population. This means the job crunch (thereby the economic crisis) was felt mainly by the more educated section of the society.

4. Using the data given in the question, that says that the no. of jobs keep on decreasing drastically with every passing year, we can say that by the end of 2009, there will definitely be a rise in the unemployment for both the sectors. But with passing time, people having less education will find it more and more difficult to get a job.

5. There had been an increase in unemployment from Jan-Feb while there's a drop in the rate of unemployment in the period Feb-Mar in both the series, though it is much pronounced in the 4-year-degree holder series. This can be attributed to the fact that many of the college degree holder who lost/left their job got themselves another job immediately in the next month while it was not so easy for the high-school degree holders, so they couldn't manage a job in that period immediately like the former group.