(a) [1 point] Run a regression of per capita income (PerCapitaInc) on percent employment in the FIRE sector
(PctEmpFIRE). What is the estimated slope? Explain what this number means in words in terms of per
capita income and also indicate if the relationship is statistically significant at the 10%, 5%, and 1% levels.
(b) [1 point] Run a regression of per capita income on percentage FIRE share, but now also include
additional regressors: unemployment rate in 2010 (UnempRate2010) and percentage non-Hispanic white in
2010 (WhiteNon HispanicPct2010). Now, what is the estimated effect of percentage FIRE share on per capita
income and also indicate if the relationship is statistically significant at the 10%, 5%, and 1% levels?
(c) [2 points] Provide economic/econometric intuition as to why the effect of FIRE share on per capita income
changed between parts (a) and (b). Note that I am asking you to think about the context (and hence the
"story" behind these data).
(d) [2 point] Construct a 95% confidence interval for the slope coefficient on PetEmpFIRE in (b). Write out
your calculations. Clearly indicate how this confidence interval relates to whether PetEmpFIRE is
statistically significant or not in this context.
