bles–>6categoriesBasegroupisfemaleHSdropoutshsgradisforfemaleHSgrads,colgradisforfemalecollegegradsTheinteractionsreflectmaleHSgradsandmalecollegegrads7Economics20-Prof.AndersonMoreonDummyInteractionsFormally,themodelisy=b0+d1male+d2hsgrad+d3colgrad+d4male*hsgrad+d5male*colgrad+b1x+u,then,forexample:Ifmale=0andhsgrad=0andcolgrad=0y=b0+b1x+uIfmale=0andhsgrad=1andcolgrad=0y=b0+d2hsgrad+b1x+uIfmale=1andhsgrad=0andcolgrad=1y=b0+d1male+d3colgrad+d5male*colgrad+b1x+u8Economics20-Prof.AndersonOtherInteractionswithDummiesCanalsoconsiderinteractingadummyvariable,d,withacontinuousvariable,xy=b0+d1d+b1x+d2d*x+uIfd=0,theny=b0+b1x+uIfd=1,theny=(b0+d1)+(b1+d2)x+uThisisinterpretedasachangeintheslope9Economics20-Prof.Andersonyxy=b0+b1xy=(b0+d0)+(b1+d1)xExampleofd0>0andd1<0d=1d=010Economics20-Prof.Anderson
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