Business Productivity Growth Hypothesis Essay Research Paper

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Business Productivity Growth Hypothesis Essay, Research Paper

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In this assignment, we will try to analyze the effects that difference in Income Ratio ( henceforth known as I.R. ) between the old ages 1980 and 1990 have on the Productivity Growth ( P.G. ) during the same period of clip.

The Income Ratio of one specific twelvemonth can be found if we take the mean income of the richest cabal of a state ( the richest 20 % of the population ) and split it by that of the poorest cabal ( the poorest 20 % ) . In this assignment, the Income Ratios that were used were those of 13 different states. The I.R. & # 8217 ; s on both 1980 and 1990 were taken for all these states and, to happen the difference between them, the I.R. for 1990 was divided by the I.R. for 1980, for each state. These new Numberss illustrate the alteration of I.R. between the two old ages so that we can compare how the P.G. alterations in relation to the alterations in the I.R..

On this assignment, we use inductive logical thinking to analyze the informations and happen a theory ( a hypothesis ) that would unite the informations given in a manner that would do sense, based entirely on our informations. How do we cognize if the & # 8220 ; theory & # 8221 ; that we formulate makes sense? In this instance we will plot the points ( derived from the column & # 8220 ; I.R. 1990/1980, & # 8221 ; traveling on the x-axis, and the column & # 8220 ; Productivity Growth 79-90, & # 8221 ; on the y-axis ) . Harmonizing to how the points are on the graph in relation to the Average Point ( 0.94,1.45 ) ( point that is an norm of all values and which divides the graph into four Quadrants ) , if 80 % of these points are where they would be expected to be to conform to the hypothesis, so there is no ground to reject this hypothesis. If, on the other manus, the bulk of the points does non conform to our hypothesis ( are non where they were predicted to be ) , so it is rejected.

Another method of concluding often used by Mainstream economic experts is & # 8220 ; deductive cognition, & # 8221 ; as opposed to & # 8220 ; inductive, & # 8221 ; described above. Their theory is formulated and merely so it is applied to the informations. Their theory on this capable suggests that productiveness within a state grows when the population has inducements to work harder ( or to work more ) . When the spread between rich and hapless additions ( an addition in I.R. organize 1980-90, ensuing in a larger ratio on the column I.R. 1990/1980 ) , so does the population & # 8217 ; s avidity to work, hence increasing the Productivity Growth. Since when one variable goes up the other besides goes up, there is a positive ( or direct ) correlativity between the two. Mainstream economic experts use deductive logical thinking to infer that there exists a positive correlativity between T

he two factors. In short, their hypothesis is that when the Income Ratio additions, the Productivity Growth besides increases, since people are more motivated. For this to be true, we would anticipate a line traveling up and to the right on the graph, passing by Quadrants II and IV. Most points ( 80 % or more ) would hold to be on these two Quadrants. This, nevertheless, is non the instance ( see graph ) , since merely about 30.77 % of the points plotted satisfy these conditions.

Since the original hypothesis was rejected, we might desire to see if there is a negative correlativity between the two variables ( that is, as one goes up, the other goes down ) . Our new hypothesis would so be & # 8220 ; as the Income Ratio additions, the Productivity Growth decreases. & # 8221 ; Then, in the instance of a high I.R. , people in lower categories would rationally get down to experience insecure and that their work is non being recognized by society, hence losing motive and bring forthing less. In this instance, since there & # 8217 ; s a negative correlativity, one would anticipate the line on the graph to travel downwards, from left to compensate, go throughing on Quadrants I and III. If this hypothesis were valid, 80 % + of the points would hold to be on these Quadrants. This is besides non the instance, for merely 69.32 % of the points are on the appropriate Quadrants. Like the first, this 2nd hypothesis besides has to be rejected.

After analysing these two relationships and seeing that neither is valid, we conclude that there is no direct relationship between the two variables tested. That does non intend that one has no consequence on the other ( it likely does ) , merely that there may be other factors and influences involved that have non been accounted for in this assignment and that one is non the lone factor responsible for the alterations in the other.

DATA SHEET

Productivity Growth Income Ratio

State

1979-90198019901990/1980

United States9.00.411.01.2

Australia9.60.89.61.0

New Zealand8.81.48.81.0

Switzerland8.71.08.00.91

Canada7.01.17.01.0

Britain6.82.07.01.03

France6.52.46.00.92

Italy6.12.05.80.95

Germany5.81.65.00.87

Holland5.61.55.00.89

Belgium4.72.23.80.81

Sweden4.71.53.80.81

Japan4.21.03.60.85

Average Income Ratio 1990 / 1980: 0.941

Average Productivity Growth 1979-90: 1.45

No. of points conforming to first hypothesis: 4/13 = 30.77 %

No. of points conforming to 2nd hypothesis: 9/13 = 69.23 %

By: Leonardo Santos

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