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From |
Austin Nichols <austinnichols@gmail.com> |

To |
"statalist@hsphsun2.harvard.edu" <statalist@hsphsun2.harvard.edu> |

Subject |
Re: st: Confusion about collinearity |

Date |
Mon, 2 Dec 2013 05:11:44 -0500 |

Kevin Yarbrough <Kevin.Yarbrough@usma.edu> : No doubt there are other coding errors, and you seem to want an eitc variable in all years, coded 0 or 1 depending on whether a state has an EITC that year. So your variable should be eitc, not eitc00, and you need long data. But there is a substantive problem as well: you are regressing log wage income on a dummy for EITC, but states have different EITC values and larger EITC benefits tend to draw more people into the labor market, i.e. you are observing different select groups of labor market participants in different years. You could include people who have zero wage income using a -glm- with log link instead; see http://blog.stata.com/2011/08/22/use-poisson-rather-than-regress-tell-a-friend/ --referring to http://www.stata.com/meeting/boston10/boston10_nichols.pdf but you probably should not model only conditional mean income, as a regression does, since the distribution of wage income will change, not just shift upward. Note that increased labor force participation due to the credit will tend to depress pretax wages of otherwise comparable workers but increase post-tax wage income of recipients. See also: http://ideas.repec.org/a/aea/aecrev/v95y2005i2p88-93.html http://ideas.repec.org/a/aea/aejpol/v2y2010i1p177-208.html On Mon, Dec 2, 2013 at 1:33 AM, Yarbrough, Kevin T CADET MIL USA USMA <Kevin.Yarbrough@usma.edu> wrote: > See comments below: > >>I followed that up with this code to replace the missing values: >> >>replace eitc00=0 if year==2000 & eitc00==. > >>If I am reading this code right, then eitc00 still = missing for all >>years other than 2000. That means the regression will only include >>data from 2000. Is this really what you want? How about this instead? >> >>replace eitc00 = 0 if eitc00 == . > > Thanks for that. I caught it too and made the change. However, the regressions still have an omitted coefficient on the interaction term because of collinearity. * * For searches and help try: * http://www.stata.com/help.cgi?search * http://www.stata.com/support/faqs/resources/statalist-faq/ * http://www.ats.ucla.edu/stat/stata/

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