Using "Shares" vs. "Log of Shares" in Fixed-Effect Estimations
AbstractThis paper looks at potential implications emerging from including "shares" as a control variable in fixed effect estimations. By shares I refer to the ratio of a sum of units over another, such as the share of immigrants in a city or school. As will be shown in this paper, a logarithmic transformation of shares has some methodological merits as compared to the use of shares defined as mere ratios. In certain empirical settings the use of the latter might result in coefficient estimates that, spuriously, are statistically significant more often than they should.
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Bibliographic InfoPaper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 5171.
Length: 25 pages
Date of creation: Sep 2010
Date of revision:
Publication status: published in: Journal of Economics and Econometrics, 2011, 54 (1), 1–7
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Other versions of this item:
- Christer Gerdes, 2011. "Using “shares” vs. “log of shares” in fixed-effect estimations," Journal of Economics and Econometrics, Economics and Econometrics Research Institute (EERI), Brussels, vol. 54(1), pages 1-7.
- C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
- C29 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Other
- J10 - Labor and Demographic Economics - - Demographic Economics - - - General
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