Part A: The Cost of Living
For this part, use the file WageXYZ.csv, where XYZ is the number that is assigned to you by the Quiz
on Learn. The file contains annual series of average nominal hourly wages for males and females in
a particular province and industry expressed in dollars per hour. The specific province and industry
for your dataset is described in the WageDescriptions.csv file. Look for the row associated by your
assigned number. The file also contains the annual series of the consumer price index base 100 = 2002
in that province (Statistics Canada, 2020).
1. Plot the evolution of the hourly nominal wage for males and females on the same chart. Interpret
what you see: what kind of trending behaviour, is there a difference between males and females
in terms of trends or fluctuations, etc.
2. Plot the evolution of hourly real wage in dollars of 2002 for males and females on the same
chart. Interpret what you see and compare this chart with the one you obtained in the previous
question. Which chart between this one and the one produced in the previous question provides
a better picture of the evolution of the standard of living of individuals working in that industry?
Explain.
3. Fit a linear trend to both real wage series and plot the two trends on the same graph. Interpret
what you see: is the wage gap changing on average? What is the annual change on average over
that period for males and females? Discuss (Hint: To answer the question, you can look at the
coefficient of time of the trend equations).
4. Detrend the real wage series using the linear trends computed in the previous question. Since
the series are annual, the detrended series are the cyclical components. Using a scatter plot,
analyze the comovement between the two cyclical components. Try to explain your results: e.g.
why there is a positive, negative or no comovement between the two variables?

DETAILED ASSIGNMENT

20210402064416assignment2