National open university of nigeria introduction to econometrics II eco 356

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Introduction to Econometrics ECO 356 Course Guide and Course Material
Introduction to Econometrics ECO 356 Course Guide and Course Material

2.5.3.0 MAIN CONTENTS

2.5.2.0 OBJECTIVE The main objective of this unit is to provide basic understanding of the topic Dummy Variable through the use of imitation variables existing or being introduced into a regression equation to solve some variables that are qualitative or immeasurable in numerical terms.
2.5.3.0 MAIN CONTENTS
The inherent assumption for the application of dummy variables is that the regression lines for the different groups differ only in the intercept term but have the same slope coefficients. For example (1). You are investigating the relationship between schooling x and earnings y, and you have both males and females in your sample. You would like to see if the sex of the respondent makes a difference.

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