California Expenditure VS. ImmigrationIntroductionOriginal HypothesisDataImmigration VS ExpenditureRegressionActual, Fitted, Residual GraphResult of RegressionGeneral TrendConclusionArnold: “They keep coming!!”California Expenditure VS. ImmigrationBy: Daniel Jiang, Keith Cochran, Justin Adams, Hung Lam, Steven Carlson, Gregory WiefelFall 2003IntroductionWhat: Economic significance of relationship between California Immigration and California Expenditure Why: Recent California budget crisisHow: Propose hypothesis, gather data and run regression. Evaluate regression to see if H0 is rejected.Original HypothesisH0: (m = 0); No relationship between Immigration and Expenditure.H1: (m 0); Correlation exists: Expenditure dependent on level of Immigration.DataPopulation, Expenditure VS Year2000520001020001520002020002520003020001980 1985 1990 1995 2000 2005ExpenditurePopulationImmigration VS ExpenditureImmigration VS Expenditurey = 0.2363x + 814.96R2 = 0.37332000030000400005000060000700008000090000100000 150000 200000 250000 300000 350000ImmigrationExpenditureRegressionDependent Variable: CAEXPENDITURESMethod: Least SquaresSample: 1 19Included observations: 19Variable Coefficient Std. Error t-Statistic Prob. CAIMMIGRATION 0.236312 0.074262 3.182128 0.0055C 814.9557 14972.46 0.054430 0.9572R-squared 0.373294 Mean dependent var 47463.47Adjusted R-squared 0.336429 S.D. dependent var 16294.13S.E. of regression 13273.18 Akaike info criterion 21.92418Sum squared resid 3.00E+09 Schwarz criterion 22.02359Log likelihood -206.2797 F-statistic 10.12594Durbin-Watson stat 0.388539 Prob(F-statistic) 0.005453Actual, Fitted, Residual Graph-30000-20000-100000100002000030000200004000060000800002 4 6 8 10 12 14 16 18Residual Actual FittedResult of RegressionR2: Significant ratio between Explained and Unexplained. (~37%)F-stat: Significant F-stat value of 10.125T-stat: Value indicates that regression was significant (3.182)Residual: Show signs of autocorrelation; when it is positive it tends to stay positive, and when it is negative it also tends to stay negativeGeneral TrendPositive slope indicates that an increase in immigration would result in an increase in expenditure.20000400006000080000100000 150000 200000 250000 300000CAIMMIGRATIONCAEXPENDITURESConclusionResult of the regression helps support the alternative hypothesis – there is a significant correlation between California Immigration & Expenditure.This confirms our initial hypothesis that there is a positive relationship between California Immigration & Expenditure.Arnold: “They keep coming!!”Currently, $3 billion spent annually on the 2.5 million illegal immigrants residing in California Only $220 million received from federal government to offset these costsThis analysis supports Arnold’s policy to curb illegal
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