. Suppose as part of the Public Protectors' inquiry (in South Africa) into gender discrimination and nepotism you are asked, as an expert in econometrics, to compare total compensation among top executives in a large set of South African public corporations (a) Let Female be an indicator variable that is equal to 1 for females and 0 for males. A regression of the logarithm of earnings onto Female yields In(Earnings) = 6.48 – 0.44Female, SER = 2.65 (0.01) (0.05) where SER is the Standard Error of the Regression, and standard errors are in parentheses. IThese scores range from 1 (lowest) to 36 (highest).
Correlation
Correlation defines a relationship between two independent variables. It tells the degree to which variables move in relation to each other. When two sets of data are related to each other, there is a correlation between them.
Linear Correlation
A correlation is used to determine the relationships between numerical and categorical variables. In other words, it is an indicator of how things are connected to one another. The correlation analysis is the study of how variables are related.
Regression Analysis
Regression analysis is a statistical method in which it estimates the relationship between a dependent variable and one or more independent variable. In simple terms dependent variable is called as outcome variable and independent variable is called as predictors. Regression analysis is one of the methods to find the trends in data. The independent variable used in Regression analysis is named Predictor variable. It offers data of an associated dependent variable regarding a particular outcome.
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