Data contains measurements of redistribution, various summaries of the earnings distribution, and controls. For details of the variables see Appendix of the article, which is also enclosed.
Task 1: Generate the appropriate bivariate plot of redist by skew (ratio9050 divided by ratio5010). Superimpose a regression line on the plot.
Question:
What is value of the slope of the regression line?
Provide comprehensive interpretation based on the output. Task 2: Using the appropriate model, estimate a regression of redistribution on skewness of the income distribution (ratio90-50 divided by ratio50-10) with turnout in the most recent national election, annual net union density, and the annual rate of unemployment as control variables. How does the regression coefficient from the multivariate regression differ from the regression coefficient of the bivariate regression identified in Question 4 (ii)?
Which coefficient is higher? Why? Provide a comprehensive interpretation based on the output. Task
3: Using the multivariate regression output in Task 1, show if there is a violation of OLS assumptions. Provide comprehensive interpretation based on the output. Task
4: Explain how the results from Task 1 change when you correct for the potential violation in OLS assumptions identified in Task 2. Provide a comprehensive interpretation based on the output.