Given the regression results Unemployment Rate_it = α + 0.8 (0.3) × Alabama_it - 0.4 (0.2) × South Carolina_it + 0.2 (0.3) × North Carolina_it + 0.4 (0.12)MinimumWage_it - 0.1 (0.1)Year_t, where the coefficients are reported with their standard errors in parenthesis, how should we interpret the coefficient for minimum wage? A) An increase in minimum wage will increase the unemployment rate. B) An increase in minimum wage will increase the unemployment rate, holding fixed (time constant) differences across states. C) An increase in minimum wage will increase the unemployment rate, holding fixed the downward trend in unemployment rates occurring across all of these three states. D) An increase in minimum wage will increase the unemployment rate, holding fixed (time constant) differences across states, and the downward trend in unemployment rates occurring across all of these three states.

Question

Quizplus · Accepted Answer

The coefficient for minimum wage is positive, indicating an increase in minimum wage is associated with an increase in the unemployment rate. This interpretation holds fixed (time constant) differences across states due to the inclusion of state-specific variables (Alabama, South Carolina, North Carolina) and the downward trend in unemployment rates across these states, indicated by the inclusion of the Year variable.

Given the Regression Results Unemployment Rateit = α + 0

Given the Regression Results Unemployment Rate_it = α + 0