Hypothesis testing; Is there Positive relationship between education and

Occupational prestige?
May 15, 2015

Submitted To:
Sheikh Jafar Emran
Adjunct Faculty
Department of Development Studies
University of Dhaka.

Submitted By:
Ahmed Toslim
7th semester undergraduate,
Roll: SS-401
Department of Development Studies,
University of Dhaka

Is there Positive relationship between education and Occupational prestige?

Hypothesis:
If the level of education for an individual increases, that persons Occupational prestige will
increase.
Prestige is a function of education.
P = f(E )
Null Hypothesis:
Education has no effect on Occupational prestige.
Alternative Hypothesis:
Education has a positive effect on Occupational prestige.

Mathematical Model:
The mathematical model is stated as follows
Y = 1 + 2X
Here, Y= Occupational prestige
X= Year of Education
This equation denotes that Occupational prestige is linearly related to Education where the
relationship between Occupational prestige and Education is called Prestige function. It is a
single-equation model because it contains only one mathematical equation. The left hand side of
the equation shows the dependent variable which is Occupational prestige and the right hand
sight shows the independent or explanatory variable which is education. The mathematical
model only shows the exact of deterministic relationship between education and Occupational
prestige.

Econometric Model:
The mathematical model only shows the exact of deterministic relationship between level of
education and Occupational prestige. Econometric model arises as there are some other factors
that can affect the model but mathematical model cannot describe such factors. The econometric
model expresses that the relationships between economic variables are generally inexact. In this
situation if we were to obtain data on Occupational prestige and level of education for a sample,
we would not expect all observations to lie exactly on the straight line because other variables

affect Occupational prestige. Occupation title, income, percentage of incumbent who were
women etc. can influence Occupational prestige.
The econometrician use disturbance term to modify the deterministic consumption function to
determine the inexact relationships between economic variables. Econometric model thus
becomesY = 1 + 2X+u
Where, u= Disturbance term (u, the disturbance term is also called
as the error, residual or the "remainder" term. The disturbance term may well represent all
those factors that affect consumption but are not taken into account explicitly).
This equation is known as econometric model. The econometric prestige function hypothesizes
that the dependent variable Occupational prestige Y is linearly related to the explanatory variable
which is level of education X. The relationship between the two is subject to individual variation,
not exact.

Literature Review:
Quoting from findings of Robert W Hodge and Christopher S Jencks, authors here try to point
out the difference of occupational prestige and occupational socioeconomic status and educations
falls within the later one. All through the works of Hauser and Warren, they have run regression
taking several elements of socioeconomic status, like Education, and they have made an
approach of drawing parity among factors.
Hauser and Warren 1996 states that, It is striking that several of the largest and most influential
exceptions to typical relationships among occupational education, wage rates, and prestige occur
in common and visible jobs: business owners, farmers, clergy, secretaries, teachers, waiters and
waitresses, janitors, and truck drivers. In each case, it is perhaps easy to rationalize the
exceptions. The business of business is making money, and the entrepreneur is an American
cultural icon. Farming is as much a way of life as a job; it carries some income in kind; and it,
too, is a cultural icon. Religious vocations are a calling. Secretaries and teachers are prototypical
womens jobs, paid more in prestige than in dollars. And so on. There are cautionary messages in
these findings. First, the typically strong connections between occupational socioeconomic status
and prestige are not simply a product of highly visible relationships across common occupations,
but show up more clearly across a large number of less common or visible jobs. Second, when
we think about the relationships among socioeconomic status and prestige, we should be most
cautious about thinking of them concretely in relation to common occupations, for they may be
exceptions. Third, prestige-validated socioeconomic indexes were initially used as proxies for
missing prestige measures. Their greater criterion validity encouraged widespread use, well after
prestige scores became available for all occupations. Thus, researchers have often glossed over
the differences between occupational prestige and socioeconomic status. The present findings
remind us that occupational prestige is by no means the same as occupational socioeconomic

status, and we should respect both the theoretical and empirical distinctions between them
(Hodge 1981, Jencks 1990).
As the basement of the study comes from the primary works of O.D. Duncan who carried out
studies to draw links between factors like Education and occupational practice and formulated
indicators like Duncans Socio-Economic Indicator. The results coming from the works of all of
the authors show evidence in general that there exists relationship. Only each differ from the
other by means of the objective of the study of how the co-relations happen and how much their
significance on the dependent ones.
Occupational prestige:
To describe the relative social class positions people have, occupational prestige is used.
Occupational prestige refers to the consensual nature of rating an occupation on the basis of the
belief of its worthiness. Prestige, as a term itself means the admiration and respect that a
particular occupation holds in a society. Occupational prestige is prestige independent of the
particular individual who occupies a job. For more than 700 occupations based on results from a
series of national surveys in the United States, sociologists have identified prestige rankings. A
scale with 0 being the lowest possible score to 100 being the highest was created, and
occupations based on the results of the survey were ranked.
Occupational prestige has been defined in various ways like some says its the consensual nature
of rating a job based on the collective belief of its worthiness. Some believe that its the
measurement of the "desirability" of an occupation in terms of socioeconomic rewards while
others opine that Prestige reflects factual, scientific knowledge about the material rewards
attached to certain occupations. In their understanding of prestige different people seem to
weight these issues differently. Majority seems to implicitly view prestige as a weighted average
of income and education. This is the operational definition used in indices like Duncan's
Socioeconomic Index. Among the working class, it seem to have more moralized notions of
how much a job helps society and would rate someone high and someone low though each of
them earns the same.

Data Collection
The numerical values of 1 and 2 for the econometric model are needed to obtain. Secondary
data is used to conduct the research. The data is obtained from different reliable sites. Mainly
prestige.dta file is used for conducting the regression analysis using STATA software. The Y
variable is the collective Individual Level of Education (ILE) and the X variable is Increase in
Occupational prestige (IOP).

Econometric Model Estimation

Next we estimate the parameters of the prestige function because now we have data. The
numerical estimates of the parameters give empirical content to the prestige function. Regression
analysis is the main technique to obtain the estimates. We use STATA to do regression analysis.

. reg prestige educat

Source

SS

df

MS

Model
Residual

21608.4361 1 21608.4361
8286.99 100 82.8699

Total

29895.4261 101 295.994318

prestige

Coef. Std. Err.

educat
_cons

5.360878 .3319882
-10.73198 3.677088

Number of obs =
F( 1, 100) =
Prob > F
=
R-squared =
Adj R-squared =
Root MSE
=

102
260.75
0.0000
0.7228
0.7200
9.1033

P>|t|

[95% Conf. Interval]

16.15 0.000
-2.92 0.004

4.702223 6.019533
-18.02722 -3.436743

Table: Regression Analysis

Using this technique and the data, we obtain the following estimates of1= -10.73198, 2= 5.360878. Thus, the estimated consumption function is:
Y = -10.73198 + 5.360878X
The hat on the Y indicates that it is an estimate. The equation shows that its intercept is negative
and the coefficient of income is positive and its value is 5.360878. This means that one
additional year increase in education increases Occupational prestige by about 5.360878 SEI.
The relationship between prestige and education is inexact.
From the table we can say that

Number of observation is 102

R- Squared is 0.7228; which means that 72.28% variance in the dependent variable prestige
which can be explained by the independent variable education
TSS or Total Sum of Squared is divided into Model and Residual sum of squared. Model shows
that independent variable education can be explained variance by 21608.4361 and Residual
shows that independent variable cannot be explained variance by about 8286.99
Degrees of freedom (df) is ; 102-2= 100
Hypothesis Testing
A scientific hypothesis is testable on the basis of observing a process and is modeled via a set of
random variables. A statistical hypothesis is a scientific hypothesis. For testing the hypothesis
there are some processes. Those processes marks that the fitted model is a reasonably good
approximation of reality. Suitable criteria have to be developed to find out whether the estimates
obtained in the equation are in accord with the expectations of the theory that aimed to be tested.
In our research equation we found the IOP to be about 5.360. Investigation must be done in order
to find whether this estimate is sufficiently below unity to assure us that this is not a chance
occurrence or peculiarity of the particular used data. This should be done before we accept this
finding as confirmation of prestige theory. The process of hypothesis testing areNull Hypothesis and Alternative Hypothesis:
Null Hypothesis:
H0

; that means education has no effect on Occupational prestige.

Alternative Hypothesis:
HA

; that means education has a positive effect on Occupational prestige.

Significance Levels:
We are testing 5% significance level
Degrees of Freedom:
102-2= 100 Degrees of freedom; this is a one tailed test
Rejection Rule:
Calculated value

Critical value

We are testing single parameters of income so we can use the t-statistic or t-test.

= (coefficient/ standard error)

= (5.360878/.3319882)
= 16.15

With df= 100, the 5% critical value of a one tailed test is 1.658 (df= ) & 1% critical value is
about 2.58
Calculated value (16.15)

Critical value (1.658)

We can reject the null hypothesis at 5% level of significance. That means the data is statistically
significant. So it is said that education has a positive effect on Occupational prestige.
F-Statistic:
We can use F-statistic to see that
coefficient is statistically significant or not. From the table
we get that F(1,100) = 260.75 which shows that it is also statistically significant with numerator
df=1 and denominator df= 100
P Value:
The P- Value of the
coefficient is 0.000. At the 1% level of significance it shows that it
rejects the null hypothesis that means statistically significant.
In conclusion, we can say that if a persons level of education increases then the respective
Occupational prestige increase and its by 53.61 SEI/ DEI (Duncans Socio-Economic Indicator).
This marks that by the used data set, hypothesis is proved.

References:
Hauser, Robert M. & Warren, John Robert 1996. Socioeconomic Indexes for Occupations: A
Review, Update, and Critique. CDE Working Paper No. 96-01.
Hodge, Robert W. 1981. The Measurement of Occupational Status. Social Science Research
vol. 10, pp. 396-415.
Hodge, Robert W., Paul M. Siegel, and Peter H. Rossi. 1964. Occupational Prestige in the
United States, 1925-63. American Journal of Sociology vol. 70, pp. 286-302.
Jencks, Christopher S. 1990. What is the True Rate of Social Mobility? pp. 103-30 in Ronald
L. Breiger (ed.) Social Mobility and Social Structure. Cambridge: Cambridge University Press.