Labour Market Performance of Immigrants in the UK Free Essay Example, 8250 words

Though the significance levels of the estimated parameters of the sample and that of the sample regression model is tested, it still remains to examine whether the features of the Classical Linear Regression Model are satisfied or not. There are three main factors which an estimated sample regression model must be testified as not being characterized by, in order to be declared as a CLRM, namely, autocorrelation, heteroscedasticity and multicollinearity. The presence of any of the aforementioned features rules out the fact that the variables being considered have a valid relationship or an association between them. There are different tests to check for the presence of the above three characteristics. In the present paper, autocorrelation will be checked with the help of the Durbin-Watson test, heteroscedasticity will be assessed with the help of White s test and the VIF test will take care of the multicollinearity factor. Autocorrelation investigates whether the consecutive estimat ed residual terms are correlated with each other or not; in case they are, the implication would be that the variables being considered are not abundant to suitably explain variations in the dependent variable and that the effects of some of the highly relevant variables are being captured by the random error term. We will write a custom essay sample on Labour Market Performance of Immigrants in the UK or any topic specifically for you Only $17.96 $11.86/page