REPORT ON REGRESSION

ANALYSIS ON HYPOTHESIS
FORMULATION
PRESENTED BY: AAKASH PATEL
JAY BARDOLIA
HETAXI PATEL

OBJECTIVE
The main purpose of formulating this regression
model is to check the dependability of real
compensation per hour on a set of variables
(output per person, unit labor cost, unit non
labor cost)
The model checks on the level of significance
and interrelated values of independent variables
on the dependent variable.

40.000
40.000

20.000

0.000
0.000

2009-03-01

2007-08-01

2006-01-01

2004-06-01

2002-11-01

2001-04-01

1999-09-01

2012-05-01

60.000

2012-05-01

80.000

2010-10-01

Real Compensation Per Hour

2010-10-01

20.000

2009-03-01

60.000

2007-08-01

80.000

2006-01-01

100.000

2004-06-01

120.000

2002-11-01

120.000

2001-04-01

140.000

1999-09-01

Unit Nonlabor Payments

1998-02-01

85.000

1998-02-01

0.000
1996-07-01

90.000

1996-07-01

20.000

1994-12-01

95.000

1994-12-01

40.000

1993-05-01

100.000

1993-05-01

60.000

1991-10-01

105.000

1990-03-01

80.000

1991-10-01

110.000

1990-03-01

100.000

1988-08-01

115.000

1988-08-01

100.000
1987-01-01

2012-05-01

2010-10-01

2009-03-01

2007-08-01

2006-01-01

2004-06-01

2002-11-01

2001-04-01

1999-09-01

1998-02-01

1996-07-01

1994-12-01

1993-05-01

1991-10-01

1990-03-01

1988-08-01

1987-01-01

120.000

1987-01-01

2012-05-01

2010-10-01

2009-03-01

2007-08-01

2006-01-01

2004-06-01

2002-11-01

2001-04-01

1999-09-01

1998-02-01

1996-07-01

1994-12-01

1993-05-01

1991-10-01

1990-03-01

1988-08-01

1987-01-01

Output Per Person

Unit Labor Cost

90.000

85.000

80.000

1987-01-01
1987-08-01
1988-03-01
1988-10-01
1989-05-01
1989-12-01
1990-07-01
1991-02-01
1991-09-01
1992-04-01
1992-11-01
1993-06-01
1994-01-01
1994-08-01
1995-03-01
1995-10-01
1996-05-01
1996-12-01
1997-07-01
1998-02-01
1998-09-01
1999-04-01
1999-11-01
2000-06-01
2001-01-01
2001-08-01
2002-03-01
2002-10-01
2003-05-01
2003-12-01
2004-07-01
2005-02-01
2005-09-01
2006-04-01
2006-11-01
2007-06-01
2008-01-01
2008-08-01
2009-03-01
2009-10-01
2010-05-01
2010-12-01
2011-07-01
2012-02-01

130.000

125.000

120.000

115.000

110.000

105.000

100.000

95.000

Output Per Person

Unit Labor Cost

Unit Nonlabor Payments

Real Compensation Per Hour

75.000

70.000

65.000

60.000

55.000

50.000

DATA SET
The data of the variables for our project are
downloaded from the website of Federal
Reserve Bank of St Louis
(www.research.stlouisfed.org). The data sets
collected for our project are Real compensation
per hour, Unit Labor cost, Unit non Labor
payment and output per person. The data set
duration varies from 1-1-1987 to 1-7-2012 and
the data collected are grouped quarterly.

REGRESSION EQUATION
CPH =+1*OPP +2*ULC + 3*UNLP ui
Where,
CPH: Compensation per hour (rate of change)
OPP: output per person (rate of change)
ULC: unit labor cost (rate of change)
UNLP: unit nonlabour payment (rate of change)
ui: Stochastic Error

HYPOTHESIS
H0i : i = 0
H1i : i 0
Where i = 1, 2, 3
H0 = null hypothesis
H1 = alternate hypothesis

REGRESSION OUTPUT
p-level

Coefficients
Intercept

Output Per Person

Unit Labor Cost
Unit Nonlabor
Payments

Adjusted R2 = 0.65982

0.23927*
0.66316*
0.14826*

0.00016
0.00000
0.00129

-0.46261*

0.00000

F value = 0.00000

*Implies significance at 5% level

CONCLUSION
From the study conducted above we came to a
conclusion that the model formulated does not
hold fair importance for the study of real
compensation per hour dependency on variables
selected as the model can explain only 65.98% of
the variation can be explained and rest remains
unexplained which is a huge portion for any such
kind of model. Though the dependent variable
has proportional relation with the independent
variables but the overall model needs some
more variables and data set to be included for a
more appropriate model.