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RE: st: RE: pooled ols interpretation, thanks
The estimated coefficient for education tells us:
For every 1 additional year of education, family income will increase by
12%. That is all you can say when interpreting the estimated
coefficient for education. The years only come into play if you wanted
to calculate a point estimate for the growth in family income.
For instance, if you wanted to know what the growth in family income is
if you had an additional year of education and the year is 1991, you
would do the following:
Take the estimated coefficients for education, d91, and the constant and
add them together. You can do this b/c all of you independent variables
are regressed in levels. Without knowing the constant, you could say
that an increase in 1 year of education in 1991 results in a (0.12+0.08
= 0.20) 20% increase in family income.
HTH
Justin White
-----Original Message-----
From: [email protected]
[mailto:[email protected]] On Behalf Of Joanne
Marshall
Sent: Friday, January 19, 2007 11:45 AM
To: [email protected]
Subject: RE: st: RE: pooled ols interpretation, thanks
thank you fellows for contribution
i have just run a regression which gives the following results, i have
to do
pooled regression. lfam stands for log of family income so that my
coefficient will give me a percentage instead of dollars.
lfam coeff
educ (years of education) 0.12
d91 (year 1991) 0.08
d92 (year 1992) 0.96
d93 (year 1993) 0.07
exper (work experience) 0.24
if i have the above result, how do i interpet educ- 0.12
normally, i would say a with an additonal year of education, there will
be
12% increase in family income. However, since i have applied d91, d92,
d93
to make the data pooled and cross sectional, does i mean 12% increase in
family income for over the three years? or 12% increase family income
for
which year?
cheers
jo
>From: "White, Justin" <[email protected]>
>Reply-To: [email protected]
>To: <[email protected]>
>Subject: RE: st: RE: pooled ols interpretation, thanks
>Date: Fri, 19 Jan 2007 11:13:34 -0500
>
>Dave is correct in trying to account for possible shocks. However, if
>you are interested in controlling for a trend, there are better ways.
>
>
>Justin White
>
>-----Original Message-----
>From: [email protected]
>[mailto:[email protected]] On Behalf Of David Jacobs
>Sent: Friday, January 19, 2007 11:10 AM
>To: [email protected]
>Subject: Re: st: RE: pooled ols interpretation, thanks
>
>Actually puting dummies for year is a good idea. What that does is
>eliminate the effects of any shocks that affect all cases. Suppose,
>for example, you were analyzing U.S. state level data and the
>national business cycle or national politics might matter. Putting
>those year dummies would control for this effect.
>
>Dave Jacobs
>
>At 10:55 AM 1/19/2007, you wrote:
> >The reason for the dropped coefficient is probably b/c you included
all
> >three of the dummy variables for year (d91, d92, d93). If you were
to
> >sum these three variables, you would get a column of 1's (which is
> >equivalent to a constant). Try running it like this:
> >
> >reg logfamincome educ d92 d93
> >
> >The estimated constant in this case would represent d91.
> >
> >In regards to the coefficient estimate for education, it has nothing
to
> >do with your annual dummy variables. It is simply the effects of
> >education on the growth in family income (I am assuming logfamincome
is
> >the Ln(famincome)).
> >
> >Plus, why include dummies for the year? Are you trying to capture a
> >trend? If so, then use a time trend variable. For instance, let's
say
> >your data is set up like this:
> >
> >Family_income education year
> > X Y Z
> >
> >You could sort year in ascending order and then:
> >gen time = _n
> >
> >Then you can run the following regression:
> >reg logfamincome educ time
> >
> >The estimated coefficient for time would by your time trend.
> >
> >Just food for thought.
> >
> >
> >Justin White
> >
> >-----Original Message-----
> >From: [email protected]
> >[mailto:[email protected]] On Behalf Of Joanne
> >Marshall
> >Sent: Friday, January 19, 2007 10:20 AM
> >To: [email protected]
> >Subject: st: pooled ols interpretation, thanks
> >
> >dear fellow
> >
> >if i was runinng a pooled ols regression and when i get the new
> >coefficient,
> >one is named as dropped, can someone please interpret?
> >
> >also say if i am running family income (dependent variable) against
> >educaction, fam income should increase with more year of education
> >(therefore i am expecting a positive sign for education).
> >
> >if I was to regress: (d91 as the year, and i have 3 years of data
here)
> >
> >reg logfamincome educ d91 d92 d93
> >how can i interpret the educ? if the coefficient of educ is 0.05,
which
> >is
> >5%
> >what does that have to do with the years 91 92 93?
> >or it is just another year of education will result with an increase
of
> >family income for 5%
> >
> >i am abit confused with the years, if it is 5%, is it over the 3
years?
> >and also what does d91 d92 coefficient tell us?
> >
> >Cheers
> >Jo
> >
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