Overview

Original Research

APPLICATION OF LEAST SQUARE DUMMY VARIABLE (LSDV) IN ESTIMATION OF UNEMPLOYMENT RATE FOR SELECTED ASIAN COUNTRIES

LIM BAO MAN 1, NUZLINDA ABDUL RAHMAN 2, and ZAINUDIN ARSAD 3

Vol 17, No 06 ( 2022 )   |  DOI: 10.5281/zenodo.6630238   |   Author Affiliation: School of Mathematical Sciences, Universiti Sains Malaysia, 11800 USM, Pulau Pinang. 1,2,3   |   Licensing: CC 4.0   |   Pg no: 50-61   |   To cite: LIM BAO MAN, et al., (2022). APPLICATION OF LEAST SQUARE DUMMY VARIABLE (LSDV) IN ESTIMATION OF UNEMPLOYMENT RATE FOR SELECTED ASIAN COUNTRIES. 17(06), 50–61. https://doi.org/10.5281/zenodo.6630238   |   Published on: 10-06-2022

Abstract

Least Square Dummy Variable (LSDV) regression model was employed in this study to investigate the compensation of the unemployment rate. The data used in this study were secondary data source of governance quality and economic freedom the from World Governance Index (WGI) and Heritage Foundation respectivthe ely from year 2002 until 2018. The variables considered were unemployment rate as the dependent variable, governance quality and economic freedom index as independent variables. The panel is subject to the Fixed effects with LSDV (FEM LSDV) model. The results obtained indicate that overall, male and female unemployment rate has the countries dummies effect with no time dummies effect. The overall, male and female unemployment FEM LSDV with countries dummies effect shows the R2-va,lue 0.9151, 0.9136 and 0.9072 respectively indicating that 91.51%, 9,1.36% and 90.7the 2% of total variation was accounted for by independent variables. The empirical results are valuable to policymakers of Asian countries in understanding the trends, patterns and effects of economic freedom, governance quality toward their unemployment rate.

Keywords

least square dummy, Fixed effect model, LSDV, panel data, the unemployment rate