The independent variables are the explanation for the level or change in the dependent variable. In this model, educational level is an independent variable that helps explain the level of wages. A dummy variable is a qualitative independent variable used in multiple regression analysis. It is thus distinguished because the usual multiple regression analysis uses quantitative data for both independent and dependent variables. 7 Labor productivity is defined as output divided by the hours of labor input.
Capital can make labor more productive.
For example, a person using a computer can do much more work in an hour than the same person with only paper and a pencil. Similarly, a person using a backhoe, or earth moving equipment can move more dirt in an hour than the same person using a shovel. This model uses 13 occupational classifications. 10 Attachment to the labor force refers to how much and how often a person works for pay. A person who worked every week in the past year, or every week for the past several years is said to be more attached than someone who only works sporadically.