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June 4th, 2017, 05:37 AM   #1
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Econometrics (regression)

Hello!

I need help to interpret my regression results. i have a hard time understanding when there is percentage point or not.

My regression:

i have an excel file with following variables:

Real GDP growth / capita
i have calculated this myself with formula ((year 2 -year 1)/year 1)* 100

Real GDP / capita year t-1
just lagged one year back

Delta minimum wage
calculated myself with ((year 2 -year 1)/year 1)* 100 , (thus i have the level of minimum wage too but its not included in my regression)

Delta unemployment
calculated myself as year 2 - year 1 ex: 5,7 - 5,5 = 0,2

Unemployment year t-1
expressed as 5,7 meaning 5,7%

Regression 1: Y Real GDP growth / capita = delta minimum wage + Real GDP / capita t-1

Regression 2: Y delta unemployment = delta minimum wage + unemployment t-1


Results: regression 1: Y (Real GDP growth / capita) = 0,159*** + -0,0143*(minlwage) + -0,0002397***(gdp level)

regression 2: Y (delta unemployment) = 0,890209** + 0,006508*(minwage) + -0,230477***(unemployment level)

To interpret these results more i do this:

regression 1:
an increase of minimum wage by 10% will lead to a decrease in GDP growth/ capita by 0,143 %. I then took the average growth in GDP/capita over the period i studied and found 1,77%. Can i say that the new growth would be 1,77 - 0,143 = 1,627% ?

Regression 2:
an increase of the minimum wage by 10% will lead to an increase in unemployment by 0,06508%. I looked up the unemployment numbers in USA which is 4,4% and 7 000 000 people. Thus 1% means 1 590 909 people. New unemployment will be 4,4 + 0,06508 = 4,46508 . 4,46508 * 1 590 909 = 7103535 people. increased unemployment number is thus: 103535 people ?

Am i interpreting this right? or do i mix percentage and percantage point?
chaarleey is offline  
 
June 4th, 2017, 08:02 AM   #2
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It is debatable whether this question belongs in the statistics forum because, although your statistics are about economics, your question is about interpreting statistics.

You have made this really confusing. If I understand you correctly, your data on the change in real GDP are NOT in percentage terms, but your data on the change in the minimum wage are. If my understanding is correct, your interpretation 1 is wrong. And it appears that the change in unemployment is in percentage points.

As a further statistical comment, have you checked whether your overall model and each of the individual coefficients are statistically significant?

About your economics, I see no reason to start with matching inflation adjusted figures (changes in real gdp) against non-adjusted numbers (changes in money minimum wages). That would be an interesting finding, but would require an explanation.
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June 4th, 2017, 08:30 AM   #3
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Quote:
Originally Posted by JeffM1 View Post
It is debatable whether this question belongs in the statistics forum because, although your statistics are about economics, your question is about interpreting statistics.

You have made this really confusing. If I understand you correctly, your data on the change in real GDP are NOT in percentage terms, but your data on the change in the minimum wage are. If my understanding is correct, your interpretation 1 is wrong. And it appears that the change in unemployment is in percentage points.

As a further statistical comment, have you checked whether your overall model and each of the individual coefficients are statistically significant?

About your economics, I see no reason to start with matching inflation adjusted figures (changes in real gdp) against non-adjusted numbers (changes in money minimum wages). That would be an interesting finding, but would require an explanation.
Thanks for answering. Yes, i didnt really know which forum it would fit best in too so i posted in both in order to get someone to look in to my problem.

I know it can be hard to understand my numbers. i will try to explain:

I have an column with Real GDP / capita numbers. ex: year 1 20000 , year 2 21000 Thus, my Real GDP growth /cap will be ((21000 - 20000) / 20000) * 100 = 5

Minimum wage is calculated in exaclty the same way. min wage year 1 10 , year 2 11 , thus delta min wage is 11-10/10 *100 = 10

Concerning unemployment, I have an column with unemployment numbers like: 5,7 for 5,7% Delta unemployment is calculated by year 2 - year 1 ex: 5,8-5,7 = 0,1

Furthermore, the findings are significant. Represented by the stars after each coefficient.

Regarding the nominal minimum wages it is because trouble of finding infaltion numbers for all years. i found that an average increase in the minimum wage was big enough to make the effect neglectable. But it would ofcourse have been nice with Real numbers on minimum wage also.
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June 5th, 2017, 12:04 PM   #4
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ANYONE HELP:

I just want to know if my reasoning behind this is correct or not?

Regression 2:
an increase of the minimum wage by 10% will lead to an increase in unemployment by 0,06508%. I looked up the unemployment numbers in USA which is 4,4% and 7 000 000 people. Thus 1% unemployment means 1 590 909 people. New unemployment will be 4,4 + 0,06508 = 4,46508 . 4,46508 * 1 590 909 = 7103535 people. increased unemployment number is thus: 103535 people ?

Or else i will just interpret it as a 10% increase in minimum wage will lead to a 0,06508 % UNIT increase. And not evaluate it any further
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