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Asked 28th Nov, 2019

How do i interpret stata coefficient of unemployment rate on logarithmic dependent variable?

I have to analyze a regression and estimate how the crime rate responds to changes in the state unemployment rate (unemp in the Stata output). The outcome variable is lcrimepc, the logarithm of the total number of crimes per capita in a specific city. The coefficient is 3.12. Given that the unemployment rate is measured in percentage points, how an increase of 1 pp affect the argument of the logarithm?

All Answers (2)

5th Dec, 2019
Alexander Gushchin
Ural State University of Architecture and Art
Hi,
for interpretation, you can use the coefficient of elasticity. Elasticity is a measure of the sensitivity of one variable (for example, demand or supply) to a change in another (for example, price, income), showing how many percent the first indicator will change when the second changes by 1%. When using a logarithmic variable instead of an absolute change in one variable, we obtain its relative change.
Unfortunately in the editor there is no way to write formulas, but I think that you will succeed.

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