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A researcher is investigating the determinants of firm labour productivity using data for the year 2014 for a sample of manufacturing firms from the electronics

A researcher is investigating the determinants of firm labour productivity using data for the year 2014 for a sample of manufacturing firms from the electronics industry. She uses the following model:

LP = b0 + b1 CAPIN - b2 W + b3 SIZE + b4 RD

where:

LP is the firm's labour productivity (measured as turnover per employee, in 000s);

CAPIN is the firm's capital intensity (measured as total assets per employee, in 000s);

W is the firm's average wage per employee, in 000s;

SIZE is an indicator of the size of the firm (measured by the log of its turnover, in 000s);

RD is the firm's R&D intensity (measured as the firm's R&D expenditure divided by its turnover), an indicator of how innovative the firm is.

The results of the estimation are:

Variables

Coefficients

Standard Errors

t-values

p-values

CAPIN

0.364

0.014

25.990

0.000

W

1.333

0.428

3.110

0.002

SIZE

3.237

5.822

0.560

0.579

RD

-21.982

11.867

-1.850

0.066

Constant

19.039

61.513

0.310

0.757

Note: The researcher is using a 5% significance level.

Select the terms from the drop down lists to complete the sentences below correctly:

From the results of the estimation we can conclude that:

a) the variable CAPIN ( is or is not) associated with the firm's productivity because the magnitude of the p-value of the CAPIN variable is (higher/lower) than the significance level;

b) the variable RD (is not/is) associated with the firm's productivity because the p-value of the RD variable is (higher/lower) than the significance level.

chose between the two words in a and b

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