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I have a data set of employees who have worked at a company throughout 2017. The data set is broken out month by month; someone can work all 12 months of the year (12 rows) and someone can have worked for 3 months before leaving/getting terminated (3 rows).

I wanted to see if there was a relationship between termination rates (1 for terminated; 0 for still at the company) and department (1 for CA; 0 for US), but because this is panel data, someone suggested that I have to use the PLM package.

I tried doing a basic function like so:

fixed <- plm (Term ~ Canada, data = df, index = c("Month"), model = "within"
summary(fixed)

These were my results:

Unbalanced Panel: n = 12, T = 116-207, N = 1972
Residuals:
Min.  1st Qu.   Median  3rd Qu.     Max. 
-0.37179 -0.24446 -0.17718 -0.04075  0.95925 

Coefficients:
Estimate Std. Error t-value  Pr(>|t|)    
CANADA -0.084064   0.018344 -4.5826 4.882e-06 ***

Signif. codes:  0 ‘***’ 0.001 ‘**’ 0.01 ‘*’ 0.05 ‘.’ 0.1 ‘ ’ 1

Total Sum of Squares:    320.25
Residual Sum of Squares: 316.85
R-Squared:      0.010606
Adj. R-Squared: 0.0045455
F-statistic: 21 on 1 and 1959 DF, p-value: 4.8822e-06

This is my first time using the PLM package, but based on the P-value, we rejet the null hypothesis and there is a significant difference between where you work (CA vs. US) and whether or not you leave.

Have I done this right? I ask especially to ensure I have chosen the correct model function. I ask because just looking at the data, American workers have only a slight termination rate higher than Canadian workers (mostly because there's a smaller total).

EDIT:

I've been informed that I should have used pglm.

I've tried something like this:

fixed <- pglm( Term ~ CANADA, data = df, na.action=na.omit, family = binomial(link = "logit"), index = "Fiscal.Period"); 

These are the results:

Estimates:
        Estimate Std. error t value  Pr(> t)    
(Intercept)  -1.0153     0.1458  -6.962 3.36e-12 ***
CANADA       -0.5200     0.1124  -4.625 3.74e-06 ***   
sigma         0.6048     0.1620   3.733 0.000189 ***
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  • $\begingroup$ I think you need to worry a bit more about R-Squared: 0.010606 than you seem to be doing. There is always a question about how useful it is as a measure of anything much, but that has got to seem low without more evidence. $\endgroup$
    – Nick Cox
    May 1, 2018 at 19:14

1 Answer 1

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I would suggest using a logit panel model instead, since that would constrain your outcome variable to fall between 0 and 1. For this, you need to use the function pglm(), which will require you installing the pglm package first. Off the top of my head, I think you need to specify the option, family = "binomial", in order to get a logit model, but double check this in the documentation. Let me know if you have any more questions.

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  • $\begingroup$ Hey, someone suggested today that I use pglm instead of plm for this particular problem (0 - 1). I'm looking into the documentation now, and trying the "Fairness" data set but I would need help understanding the results there too. $\endgroup$ May 2, 2018 at 19:58
  • $\begingroup$ Sure man, I'm happy to help. If my first reply answered your first question, could you mark it as an answer? $\endgroup$
    – notebook
    May 3, 2018 at 3:57
  • $\begingroup$ Done. I used pglm on the Fairness data set, but I don't understand what I am to make of the summary. What is the initial function value mean? And what do the initial gradient values mean? $\endgroup$ May 3, 2018 at 13:33
  • $\begingroup$ Be careful: the example given using the Fairness data is an ordered probit example - the dependent variable can take 4 possible values. In your case, you need to use a binary logit model. Run the following code in R (posted in next comment) - I've created a new variable from "answer", that takes the value 0 if they answer 0 or 1, and 1 if they answer 2 or 3. I then run a logit model predicting this, using all other variables. The resulting regression table should be clear. Let me know if you need anything else. (Apologies for messiness; semicolons indicate the end of a command). $\endgroup$
    – notebook
    May 3, 2018 at 15:53
  • $\begingroup$ library(pglm); data("Fairness"); Fairness[,"fair"] <- integer(nrow(Fairness)); for (i in 1:nrow(Fairness)){ if (is.na(Fairness[i,"answer"])){ Fairness[i,"fair"] <- NA } else if (Fairness[i,"answer"]=="2" | Fairness[i,"answer"]=="3"){ Fairness[i,"fair"] <- 1 } }; mod <- pglm(fair ~ good + rule + driving + education + recurring, data=Fairness, na.action=na.omit, family = binomial(link = logit"), index = "id"); summary(mod); $\endgroup$
    – notebook
    May 3, 2018 at 15:53

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