Question
A major fast-food chain conducted a study of worker productivity. Using regression, it found that productivity (measured along several dimensions that are relevant to the
A major fast-food chain conducted a study of worker productivity. Using regression, it found that productivity (measured along several dimensions that are relevant to the production and service of fast food) is higher for workers who earn higher wages, even after controlling for worker experience. However, wages appear to have no effect on productivity in a regression that controls for both worker experience and the median income of the local community where the fast-food chain is located. In this latter regression, the estimated coefficient on local income is positive. What must be the sign of the relationship between wages and local income (holding worker experience fixed) in the study? Explain your reasoning
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