(Full-Time, full-year)

Women
34,100
33,700
34,400
36,700
38,600
40,500
40,600
43,200
44,100
44,700

Year
1976
1981
1986
1991
1996
1998
2001
2006
2007
2008
Retrieved
from

Table 7

Men
57,300
53,000
52,500
53,400
53,000
56,300
58,100
60,000
61,700
62,600

http://www.statcan.gc.ca/pub/89-503-x/2010001/article/11388/tbl/tbl007-eng.htm
Source: Statistics Canada, CANSIM table 202-0102.

Coefficient of Determination
R2 Women = 0.94
R2 Men = 0.49
The coefficient of determination is 0.94. This statistic tells us that 94% of the variation of
average annual earnings of women is explained by the variation in the years. The remaining 6%
is still unexplained.
The coefficient of determination is 0.49. This statistic tells us that 49% of the variation of
average annual earnings of men is explained by the variation in the years. The remaining 51% is
still unexplained.

Standard Error of Estimate

SE Women = 1068.73
Y Bar Women = 39,060
1068/39060 = 0.027
We interpret the value of standard error of estimate by comparing it to the values of the
dependent variable y or more specifically to the sample average y. The standard error of estimate
is 1068 and y is 39,060. The standard error of estimate is relatively small, 2.7%. The model fit is
excellent.

SE Men = 2866
Y Bar Men = 56,790
2866/56,790 = 0.050
We interpret the value of standard error of estimate by comparing it to the values of the
dependent variable y or more specifically to the sample average y. The standard error of estimate
is 2866 and y is 56,790. The standard error of estimate is relatively small, 5.0%. The model fit is
excellent.

Testing the Validity of the Model

Women:
0: 1=2===0 (model is not valid)
1: 0(model is valid)
=0.05,,1=0.05,1,8 = 5.32
Fstat = 131.75

5.32

F stat fall in rejection area. There is enough evidence to reject H0. The regression model is valid.
rejection region of 0
Men:
0: 1=2===0 (model is not valid)
1: 0(model is valid)
=0.05,,1=0.05,1,8 = 5.32
Fstat = 7.70

5.32
F stat fall in rejection area. There is enough evidence to reject H0. The regression model is valid.
rejection region of 0

Interpreting the Coefficients

Intercept Women: The intercept is 0=-687690. This is the average annual earnings when all
the independent variables are zero.

Intercept Men: The intercept is 0=-414516. This is the average annual earnings when all the
independent variables are zero.
Year Women: The relationship between average annual earnings and year is described by
1=364.28. From this statistic, we can determine that for each following year in this model,
average annual earnings increases on average by $364.28.
Year Men: The relationship between average annual earnings and year is described by
1=236.24. From this statistic, we can determine that for each following year in this model,
average annual earnings increases on average by $236.24.

Testing the Coefficients

Hypothesis
Women
0: 1=0
1: 10
Men
0: 2=0
1: 20

T Critical
+2.306
-2.306

T Stat
11.47

Linear Relation
Reject H0. Yes,
Linear Relation

+2.306
-2.306

2.77

Reject H0. Yes,

Linear Relation

T Critical

-2.306

+2.306

/2=0.05/2=0.025=2.306 Degree of freedom is n-k-1=10-1-1=8

Therefore, there is a linear relation between average annual earnings and
year for both men and women.

Graphs
Average Annual Earnings by Year Women
46,000
44,000
42,000

f(x) = 364.29x - 687690

R = 0.94

40,000
Women

38,000
36,000
34,000
32,000
30,000
1970 1975 1980 1985 1990 1995 2000 2005 2010
Year

Average Annual Earnings by Year Men

64,000
62,000
60,000
58,000

f(x) = 236.24x - 414515.56

R = 0.49

56,000
Men 54,000
52,000
50,000
48,000
46,000
1970 1975 1980 1985 1990 1995 2000 2005 2010
Year