ECS4863
ASSIGNMENT 3 SEMESTER 2 2023
, ASSIGNMENT 03
DUE DATE: 18 August 2023
UNIQUE NUMBER: 723336
This assignment deals with the following assessment criteria:
- Lesson 3 (Panel data methods)
Question 1: (9 marks)
1.1 In your own words, explain the reasons why a researcher will want to use panel data.
Also provide some real-life examples where panel data is used in South Africa. (2)
1.2 Explain the reasons for preferring random effects over pooled OLS. (3)
1.3 In your own words, explain how you will determine which is the better model between
pooled OLS and least square dummy variable. (4)
Question 2: (21 marks)
In this question you need to analyse the annual unemployment rate (U) and annual wage
(W) data for three economies namely Delta, Alpha and Theta. The wages are paid in Rands.
A basic theoretic specification for wages can be written as follows:
𝑈𝑖𝑡 = 𝛽0 + 𝛽1 𝑊𝑖𝑡 + 𝑒𝑖𝑡 (1)
Where:
U: annual unemployment rate
W: annual weekly wage
The data is available in the Excel sheet: ECS4863 2023 Assignment 03 Q2_data. Please note,
that when submitting your results, you should define the variables that you have created.
Where applicable, you can copy and paste your EViews output onto your answer sheet.
2.1 What is your a-priori expected relationship between wages and employment? Make
sure to provide a reference/source for your answer. (2)
2.2 Estimate the model (1) using pooled OLS and interpret the results. Are there any
Random effects in the model? (3)
ASSIGNMENT 3 SEMESTER 2 2023
, ASSIGNMENT 03
DUE DATE: 18 August 2023
UNIQUE NUMBER: 723336
This assignment deals with the following assessment criteria:
- Lesson 3 (Panel data methods)
Question 1: (9 marks)
1.1 In your own words, explain the reasons why a researcher will want to use panel data.
Also provide some real-life examples where panel data is used in South Africa. (2)
1.2 Explain the reasons for preferring random effects over pooled OLS. (3)
1.3 In your own words, explain how you will determine which is the better model between
pooled OLS and least square dummy variable. (4)
Question 2: (21 marks)
In this question you need to analyse the annual unemployment rate (U) and annual wage
(W) data for three economies namely Delta, Alpha and Theta. The wages are paid in Rands.
A basic theoretic specification for wages can be written as follows:
𝑈𝑖𝑡 = 𝛽0 + 𝛽1 𝑊𝑖𝑡 + 𝑒𝑖𝑡 (1)
Where:
U: annual unemployment rate
W: annual weekly wage
The data is available in the Excel sheet: ECS4863 2023 Assignment 03 Q2_data. Please note,
that when submitting your results, you should define the variables that you have created.
Where applicable, you can copy and paste your EViews output onto your answer sheet.
2.1 What is your a-priori expected relationship between wages and employment? Make
sure to provide a reference/source for your answer. (2)
2.2 Estimate the model (1) using pooled OLS and interpret the results. Are there any
Random effects in the model? (3)
