Hi all,
I am trying to estimate the effect of local unemployment on the employment outcomes of the citizens:
employed=LUR+LUR2+X+L+Y_FE+M_FE+error
where LUR is the local unemployment rate (min 0.01 max 0.11), X are individual characteristics and L local characteristics and I control for fixed effect of the year and municipality. Employed is a dummy variable, where 1 indicates employed and 0 otherwise.
As I have panel data I am estimating with Random Effects (after having checked Hausman test):
xi: xtreg employed c.unemployment##c.unemployment $id $municipality i.year i.municipality, re i(id) vce(robust)
where $id $municipality are the individual and municipality characteristics I account for.
The estimates that I get for unemployment and unemployment2 are 3.4 and -36 respectively (both significant), so the turning point is in 0.047.
At this point I wonder how do I interpret the results then?
My guess would be that a one percentage point increase in the local unemployment increases the probability of being employed until the point when unemployment rate is over 4.7%, then the local unemployment rate affects negatively the employment outcomes of the individual, does this make sense?
I am trying to estimate the effect of local unemployment on the employment outcomes of the citizens:
employed=LUR+LUR2+X+L+Y_FE+M_FE+error
where LUR is the local unemployment rate (min 0.01 max 0.11), X are individual characteristics and L local characteristics and I control for fixed effect of the year and municipality. Employed is a dummy variable, where 1 indicates employed and 0 otherwise.
As I have panel data I am estimating with Random Effects (after having checked Hausman test):
xi: xtreg employed c.unemployment##c.unemployment $id $municipality i.year i.municipality, re i(id) vce(robust)
where $id $municipality are the individual and municipality characteristics I account for.
The estimates that I get for unemployment and unemployment2 are 3.4 and -36 respectively (both significant), so the turning point is in 0.047.
At this point I wonder how do I interpret the results then?
My guess would be that a one percentage point increase in the local unemployment increases the probability of being employed until the point when unemployment rate is over 4.7%, then the local unemployment rate affects negatively the employment outcomes of the individual, does this make sense?
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