13.57 The OECD keeps track of the labor market developments of its member states. Its topics of interest include not only the total volume of the labor force but also its composition by age and gender. There are marked differences between the member states in this respect.

Take Italy, for example: the labor market participation of the youth (15–24 years old) in Italy, and in particular of the women in that age group, differs considerably from that of the other countries. See the data file OECD Lab Force Italy for the data related to this.

a. Create a scatterplot demonstrating the development of the labor market participation of 25-year-olds and above and of young men and women (15–24 years old). Summarize these developments.

b. Estimate a multiple regression model that explains the youth labor market participation of women who are 25 years old and above and of men youth

(15–24 years old). Use the Durbin-Watson statistic to test for autocorrelation.

c. Add the lagged value of women’s youth labor market participation as a predictor to the regression model. Calculate the Durbin-Watson statistic.
What model do you prefer?