Dummy variable data analysis
on Math
1. Incorporating a dummy variable
2. dummy variable from ANCOVA (Analysis of Covariance) models
Yi = α1 + α2D2i + α3D3i + α4Xi + Ui
where,
Yi = average annual salary of public school teachers in state i Xi = State expenditure on public schools per pupil D2i = 1, if the State i is in the North Region D2i = 0, otherwise D3i = 1, if the State i is in the South Region D3i = 0, otherwise
Say the regression output for this model is
Ŷi = 13,269.11 − 1673.514D2i − 1144.157D3i + 3.2889Xi
Reference