California Expenditure VS. Immigration By: Daniel Jiang, Keith Cochran, Justin Adams, Hung Lam, Steven Carlson, Gregory Wiefel Fall 2003

Introduction What: Economic significance of relationship between California Immigration and California Expenditure Why: Recent California budget crisis How: Propose hypothesis, gather data and run regression. Evaluate regression to see if H 0 is rejected.

Original Hypothesis H 0 : (m = 0); No relationship between Immigration and Expenditure. H 1 : (m  0); Correlation exists: Expenditure dependent on level of Immigration.

Data

Immigration VS Expenditure

Regression Dependent Variable: CAEXPENDITURES Method: Least Squares Sample: 1 19 Included observations: 19 VariableCoefficientStd. Errort-StatisticProb. CAIMMIGRATION C R-squared Mean dependent var Adjusted R-squared S.D. dependent var S.E. of regression Akaike info criterion Sum squared resid3.00E+09 Schwarz criterion Log likelihood F-statistic Durbin-Watson stat Prob(F-statistic)

Actual, Fitted, Residual Graph

Result of Regression R 2 : Significant ratio between Explained and Unexplained. (~37%) F-stat: Significant F-stat value of T-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 negative

General Trend Positive slope indicates that an increase in immigration would result in an increase in expenditure.

Conclusion Result 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 costs This analysis supports Arnold’s policy to curb illegal immigration