Specific Objectives:

1.Describe how and why you selected a given variable as the IV. Make sure you go through and test the assumptions of your IV.

2.Write down the data generating model that you will use to conduct your analysis

3.Justify why you are using the variables you selected in your analysis.

4.Provide your results and recommendations

Make sure the report includes main regression output and data descriptive statistics, especially for the variables you used

Background: You work for ABC Company as the chief data analyst in the HR department. It is your job to track the information on your employees which the company is required to maintain.

The main dataset you work with is called "HR Data new" which as a lot of information on your employees. The variables that are included are:

Age - age in years

BusinessTravel - variable that describes if the employee travels for work

Department - the department the employees works for

DistanceFromHome - distance in miles the employee lives from their workplace

Education - 1 'Below College' 2 'College' 3 'Bachelor' 4 'Master' 5 'Doctor'

EducationField - which field the employee studied

EmployeeNumber - id number for each employee

EnvironmentalSatisfaction - how satisfied is the employee with their work environment: 1 'Low' 2 'Medium' 3 'High' 4 'Very High'

Gender - gender of each employee

JobInvolmenent - how involved is the employee at work, data from a survey: 1 'Low' 2 'Medium' 3 'High' 4 'Very High'

JobLevel - 1 very low, 2 low, 3 medium, 4, high, 5 very high

JobRole - role of the employee in the company

JobSatisfaction - 1 'Low' 2 'Medium' 3 'High' 4 'Very High'

MaritalStatus - marital status of each employee

MonthlyIncome - Monthly income of each employee

NumCompaniesWorked - number of companies the employee work at before ABC company

Over18 - is the employee over the age of 18

OverTime - does the employee work overtime

PercentSalaryHike - percent of salary increase last year

PerformanceRating - 1 'Low' 2 'Good' 3 'Excellent' 4 'Outstanding'

RelationshipSatisfaction - is the employee satisfied in their relationship: 1 'Low' 2 'Medium' 3 'High' 4 'Very High'

StandardHours - what the employee work hours for a two week period

StockOptionLevel - 0 no stock options, 1 low level of stock options, 2 medium stock option level, 3 high stock option level

TotalWorkingYears - number of years employee has worked

WorkLifeBalance - 1 'Bad' 2 'Good' 3 'Better' 4 'Best'

YearsAtCompany - number of years employee worked at the ABC company

YearsInCurrentRole - Years in current position

YearsSinceLastPromoted - number of years since last promotion

YearsWithCurrManager - number of years the employee worked under current manager

Objective: You were reviewing the data again and you noticed that there is a relationship between years at company and employee monthly income. You notified your CEO regarding this finding and she asked you to precisely estimate the impact of "YearsAtCompany" on "MonthlyIncome". Your CEO told you that you must find a way to address the endogeneity of YearsAtCompany as employees don't randomly decide to stay in their work. You decided to use Instrumental Variable strategy for your analysis.

**** HR Data new.xlsx