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  • Using mlogit to compare two regions in the sample

    Hi,

    I am working on a paper concerning different strategies in sourcing Intermediate inputs in production. My outcome variable is a categorical variable taking values 1-5. I want to check whether there are any significant differences in the organization of the firm across these categories. To do that I have been running -mlogit-, with some independent variables. However, since these are European firms, I hypothesise that there might be differences between Northern and Southern Europe, and I would like to see if there are any differences in the structure of the firm also across these two regions. I was wondering if this can be done by just splitting the sample in North and South, and then run two independent -mlogit x1 x2 ... if North == 1- and -mlogit x1 x2 ... if South == 1- and then just list them next to each other, and compare like (Note: it is not a causal study, I am just trying to see whether there are significant differences in the structure of the firm):

    Code:
    . mlogit sourcingmode tfp2008 exporter if coresample == 1 & north == 1, robust base(1)
    
    Iteration 0:   log pseudolikelihood = -3185.0168 
    Iteration 1:   log pseudolikelihood = -3092.6962 
    Iteration 2:   log pseudolikelihood = -3089.8223 
    Iteration 3:   log pseudolikelihood = -3089.7949 
    Iteration 4:   log pseudolikelihood = -3089.7949 
    
    Multinomial logistic regression                 Number of obs     =      2,261
                                                    Wald chi2(8)      =     162.29
                                                    Prob > chi2       =     0.0000
    Log pseudolikelihood = -3089.7949               Pseudo R2         =     0.0299
    
    ------------------------------------------------------------------------------
                 |               Robust
    sourcingmode |      Coef.   Std. Err.      z    P>|z|     [95% Conf. Interval]
    -------------+----------------------------------------------------------------
    DO           |  (base outcome)
    -------------+----------------------------------------------------------------
    DI           |
         tfp2008 |   .0463079   .1671139     0.28   0.782    -.2812293    .3738451
        exporter |   -.165352   .1630326    -1.01   0.310    -.4848899     .154186
           _cons |  -1.075222   .1230861    -8.74   0.000    -1.316466   -.8339775
    -------------+----------------------------------------------------------------
    FO           |
         tfp2008 |   .2543847   .0928671     2.74   0.006     .0723686    .4364009
        exporter |   1.012922   .1155234     8.77   0.000     .7865008    1.239344
           _cons |  -.4321649   .0975584    -4.43   0.000    -.6233759   -.2409539
    -------------+----------------------------------------------------------------
    DIFO         |
         tfp2008 |   .2472427   .1828191     1.35   0.176    -.1110762    .6055615
        exporter |   .8684782   .1846155     4.70   0.000     .5066384    1.230318
           _cons |  -1.729958   .1585914   -10.91   0.000    -2.040791   -1.419125
    -------------+----------------------------------------------------------------
    FI           |
         tfp2008 |    .552963   .1579696     3.50   0.000     .2433483    .8625778
        exporter |   2.014189   .2645019     7.62   0.000     1.495775    2.532603
           _cons |  -2.737447   .2499555   -10.95   0.000    -3.227351   -2.247544
    ------------------------------------------------------------------------------
    Code:
    . mlogit sourcingmode tfp2008 exporter if coresample == 1 & south == 1, robust base(1)
    
    Iteration 0:   log pseudolikelihood = -5227.2017 
    Iteration 1:   log pseudolikelihood = -4944.6407 
    Iteration 2:   log pseudolikelihood = -4935.4004 
    Iteration 3:   log pseudolikelihood = -4935.0236 
    Iteration 4:   log pseudolikelihood = -4935.0224 
    Iteration 5:   log pseudolikelihood = -4935.0224 
    
    Multinomial logistic regression                 Number of obs     =      4,336
                                                    Wald chi2(8)      =     438.85
                                                    Prob > chi2       =     0.0000
    Log pseudolikelihood = -4935.0224               Pseudo R2         =     0.0559
    
    ------------------------------------------------------------------------------
                 |               Robust
    sourcingmode |      Coef.   Std. Err.      z    P>|z|     [95% Conf. Interval]
    -------------+----------------------------------------------------------------
    DO           |  (base outcome)
    -------------+----------------------------------------------------------------
    DI           |
         tfp2008 |   .8361852   .1292515     6.47   0.000      .582857    1.089513
        exporter |    .309192     .12668     2.44   0.015     .0609037    .5574802
           _cons |  -1.939009   .1045761   -18.54   0.000    -2.143974   -1.734043
    -------------+----------------------------------------------------------------
    FO           |
         tfp2008 |   .6267666    .079925     7.84   0.000     .4701166    .7834167
        exporter |    1.34326   .0871128    15.42   0.000     1.172522    1.513998
           _cons |  -1.285744   .0778412   -16.52   0.000     -1.43831   -1.133178
    -------------+----------------------------------------------------------------
    DIFO         |
         tfp2008 |   1.275918   .1410801     9.04   0.000     .9994066     1.55243
        exporter |   1.565335   .1866388     8.39   0.000      1.19953     1.93114
           _cons |  -3.041633   .1732831   -17.55   0.000    -3.381261   -2.702004
    -------------+----------------------------------------------------------------
    FI           |
         tfp2008 |    1.39548   .2435528     5.73   0.000     .9181253    1.872835
        exporter |   2.857254   .4582993     6.23   0.000     1.959003    3.755504
           _cons |  -4.988943   .4496186   -11.10   0.000     -5.87018   -4.107707
    ------------------------------------------------------------------------------
    For example, with these results I could say something like: Both in the South and the North being an exporter increases the relative probability that the firm is using FO, DIFO, or FI over DO.
    In the South, exporting significantly increases the log odds of using DI over DO, while there is no significant effect in the North. This suggests that exporting and foreign sourcing is positively related in the North, while in the South, the relative probability of all other sourcing strategies compared to DO increases if a firm also exports some of its production.

    I guess I could need some advice on how to formulate an interpretation that is not sounding causal, since this is not a causal study. It should not sound like exporting causes the relative probability of FI to increase, but rather that firms that export are relatively more likely to use FI than DO. :D


    All firms in the sample is either in the North or in the South, so I was wondering if this could possibly be done within the same model using interaction terms, but I was not certain of how to interpret the results then. I tried making an example, but it just does not make sense to me:
    Code:
    . mlogit sourcingmode tfp2008 exporter exportern if coresample == 1, robust base(1)
    
    Iteration 0:   log pseudolikelihood = -8560.3337 
    Iteration 1:   log pseudolikelihood = -8128.4708 
    Iteration 2:   log pseudolikelihood = -8099.7006 
    Iteration 3:   log pseudolikelihood =  -8099.396 
    Iteration 4:   log pseudolikelihood = -8099.3953 
    
    Multinomial logistic regression                 Number of obs     =      6,597
                                                    Wald chi2(12)     =     714.31
                                                    Prob > chi2       =     0.0000
    Log pseudolikelihood = -8099.3953               Pseudo R2         =     0.0538
    
    ------------------------------------------------------------------------------
                 |               Robust
    sourcingmode |      Coef.   Std. Err.      z    P>|z|     [95% Conf. Interval]
    -------------+----------------------------------------------------------------
    DO           |  (base outcome)
    -------------+----------------------------------------------------------------
    DI           |
         tfp2008 |   .5797641   .1048356     5.53   0.000       .37429    .7852382
        exporter |  -.0103951   .1059574    -0.10   0.922    -.2180678    .1972776
       exportern |   .4099698   .1304038     3.14   0.002     .1543831    .6655566
           _cons |  -1.649886    .078551   -21.00   0.000    -1.803843   -1.495929
    -------------+----------------------------------------------------------------
    FO           |
         tfp2008 |   .5399869   .0619008     8.72   0.000     .4186636    .6613101
        exporter |   1.036042   .0716425    14.46   0.000     .8956254    1.176459
       exportern |   .5510883   .0742808     7.42   0.000     .4055007     .696676
           _cons |  -.9994194   .0597341   -16.73   0.000    -1.116496   -.8823427
    -------------+----------------------------------------------------------------
    DIFO         |
         tfp2008 |   .8820604   .1147819     7.68   0.000      .657092    1.107029
        exporter |   1.029363   .1329755     7.74   0.000     .7687362    1.289991
       exportern |   .5856167    .117866     4.97   0.000     .3546036    .8166298
           _cons |   -2.51832   .1146602   -21.96   0.000     -2.74305    -2.29359
    -------------+----------------------------------------------------------------
    FI           |
         tfp2008 |   1.005622    .136158     7.39   0.000     .7387571    1.272487
        exporter |   1.694092   .2332873     7.26   0.000     1.236858    2.151327
       exportern |   1.387403   .1277538    10.86   0.000      1.13701    1.637796
           _cons |   -3.83035   .2153664   -17.79   0.000     -4.25246   -3.408239
    ------------------------------------------------------------------------------
    Here exportern is an interaction term: exporting*North.
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