∙
Suppose productivity is expensive to measure, so the firm chooses a
relatively small sample of workers. The random sample is
X
i
:
i
1,...,
n
, where
X
i
is the change in worker
i
’s productivity.
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∙
Here the null hypothesis might be that there was no effect on
productivity and the alternative that there was some effect (positive or
negative):
H
0
:
0
and the alternative hypothesis is
H
1
:
≠
0
∙
Of course, the firm is interested in whether
0 or
0 if
H
0
is
false.
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