The unemployment rate can vary from one state to another, and in 2008 the standard deviation was 1.2% for the percent unemployed, which averaged 5.3% at the time. Table 12.5.5 shows these unemployment rates together with two possible explanatory variables: the educational level (percentage of college graduates for 2007) and the amount of federal spending (federal funds in dollars per capita, for 2007). To explore how well unemployment can be explained by these additional variables, please look at the multiple regression results from MINITAB in Table 12.5.6. Write a paragraph summarizing the strength of the connection. In particular, to what extent do education and federal funding explain the cross-section of unemployment across the states?
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TABLE 12.5.5 Unemployment Rate by State, with College Graduation Rate and Federal Spending State Alabama Alaska Arizona Arkansas Califomia Colora do Connecticut Delaware Florida Georgia Hawaii Idaho llinois Indiana lowa Kansas Kentucky Louisiana Maine Maryland Massachusetts Michigan Minnesota Mississippi Missouri Montana Unemployment 5.6% 6,8 5.9 5.2 College Grads 21.4% 26.0 25.3 19.3 29.5 35.0 34.7 26.1 25.8 27.1 29.2 24.5 29.5 22.1 24.3 28.8 20.0 20.4 26.7 35.2 37.9 24.7 31.0 18.9 24.5 27.0 Federal Funds $9,571 13,654 7,519 7,655 7,006 7,222 8,756 6,862 7,905 6,910 10,555 6,797 6,433 6,939 7,344 7,809 8,945 16,357 8,350 12,256 8,944 6,665 6,189 14,574 8,952 8,464 4.8 5.7 5.0 4.2 5.4 6.6 6.0 4.0 4.5 6.3 5.0 5.4 4.2 5.3 5.5 6.5 5.2 Continued) 59 223 01453599 2 7, 5, 6, 7, 0, 7, 6, 9, 7, 8, 6, 8, 8, 7, 0, 8, 7, 6, 8, 3, 7, 8, 6, 0, 859876718388508276633 44 1 2233232 222333122 844542574397068590 470 lv-