The Palestinian Economy. Theoretical and Practical Challenges
The Palestinian Economy. Theoretical and Practical Challenges
The Palestinian Economy. Theoretical and Practical Challenges
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Proceedings “<strong>The</strong> <strong>Palestinian</strong> <strong>Economy</strong>: <strong>The</strong>oretical <strong>and</strong> <strong>Practical</strong> <strong>Challenges</strong>” 401<br />
4. Model <strong>and</strong> data<br />
In the statistical literature, models for analysing categorical dependent variables belong to<br />
the family of models known as generalised linear mixed models (GLMMs). <strong>The</strong> specific<br />
GLMM for a dependent variable with three or more categories is the multinomial logit<br />
r<strong>and</strong>om effects model. Labour force status-LFS is modelled as multinomial choice model<br />
with three choices (1, 0,-1) representing (unemployed, fully employed, underemployed).<br />
A multinomial logistic regression technique is the relevant tool to use. <strong>The</strong> expression<br />
used to predict the probability of each dependent variable outcome is as follows:<br />
p ( Y<br />
i<br />
i<br />
m)<br />
e<br />
( z<br />
im<br />
)<br />
/1<br />
m<br />
1<br />
j1<br />
e<br />
( z )<br />
ij<br />
Where zim<br />
is the linear function used to predict outcomes M, m is the number of<br />
dependent variable categories. <strong>The</strong> estimates of the model yield two coefficients: the<br />
odds- ratio, <strong>and</strong> the log odds ratio. Three types of statistical tests will be used to test the<br />
reliability of the estimates: <strong>The</strong> pseudo R-square, the likelihood ratio test, <strong>and</strong> the Wald<br />
test.<br />
<strong>The</strong> regression equation will be as follows:<br />
LFS B0 B1SEX<br />
B2<br />
AGE B3<br />
ACT B4WBGS<br />
B5DIST<br />
B6LOC<br />
B7SCH<br />
B8SOC<br />
U i<br />
LFS is the labour force status of respondent i, SEX is the sex for the respondents, AGE is<br />
the age of respondent, ACT is the sector in which the respondents work –if employed,<br />
WBGS is the region of the respondents, DIST is the district of the respondents, LOC is<br />
the locality type for the respondents, SCH years of schooling, SOC is marital status <strong>and</strong><br />
U<br />
i<br />
is the error term.<br />
Sex of the respondents is represented of two dummy variables: male, <strong>and</strong> female (as<br />
a base category). <strong>The</strong> second category of explanatory variable captures respondent<br />
characteristics, including three respondents characteristics: age, marital status, <strong>and</strong> years<br />
of schooling, the age represented by eight dummies:15-19, 20-24, 25-29, 30-34, 35-39,<br />
40-44, 45-49, <strong>and</strong> 50 <strong>and</strong> over (as a base category), marital status is represented by three
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