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Re: st: Question about the use of ratio variables
From
Fernando Rios Avila <[email protected]>
To
[email protected]
Subject
Re: st: Question about the use of ratio variables
Date
Mon, 9 Jul 2012 22:43:43 -0400
I think your problem is similar to the division bias issue in Labor economics.
I suggest you to look for the following paper:
The Relationship between Wages and Weekly Hours of Work: The Role of
Division Bias
George J. Borjas
The Journal of Human Resources
Vol. 15, No. 3 (Summer, 1980), pp. 409-423
It discusses the problem, consequences and some solutions.
Fernando.
On Mon, Jul 9, 2012 at 10:20 PM, hsini <[email protected]> wrote:
>
> Dear all,
>
> I have a question about the use of ratio variables.
> Is it problematic to have a regression equation like : (Yi/population) = b0+ b1*(Xi/Yi) +b2X2 + error?
>
> Let's say Yi is the number of innovation per region, and Xi is the number of small firm innovation. The ratio variable is a very important measure since in my theory it represents the organizational ecology of the region. I excluded regions with zero innovation. However, I am afraid of any function problem since I have Yi on the both side of the equation. I have read Bradshaw and Radbill (1987) paper discussing the use of ratio variables. It seems to me they were dealing with the ratio is generated by a third variable (Z), which is a bit different from my situation. Any suggestion?
>
>
> Sincerely,
> Hsini Huang
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