c). You want to write a simple model to understand some of the determinants of the likelihood
Question:
c). You want to write a simple model to understand some of the determinants of the likelihood of getting unemployed during an upcoming economic recession. Assume you have the following information about a random sample of 150 individuals: age and number of years of education (continuous variables), gender (=1 if female, =0 otherwise), and the type of contract (=1 if full-time, =0 if part-time). c1) What model would you estimate to capture possible nonlinearities better than the linear approach binary models? Briefly discuss the relative advantage and/or disadvantage of using a nonlinear vs. a linear function to model the conditional probability function of a binary dependent variable. Please keep the explanation concise and related to point. c 2) How would you go about interpreting the resulting output when using the model specified in c 1) above? Describe both the continuous and binary explanatory variables. c 3) Do you have any concerns estimating the model in c1) with the sample you have? Explain why or why not. (4p) c 4) What summary statistics should be included? ( Note: no need to write down the formulas)