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I have an issue: my dependent variable is expressed in % (it's the % of people that think they will lose their job) , my regressor is expressed in % (it's the share of foreign residents on total population). The coefficient of my regression (FE estimator) is -1,44. What is the correct interpretation? A 1% increase in x reduced my y by 144%? OR a 1% increase in x reduced my y by 1,44%?

Thank you very much in advance

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When talking about changes of the quantities that are measured in percents, one should use percentage points. Percentage point is nothing else than just the arithmetic difference between two percentages. So here the correct interpretation would be (in case of an additive model such a linear regression):

A 1 percentage point increase in X corresponds to 1.44 percentage points decrease in Y.

In other words, if we raise X from 50% to 51% (for example), then Y would decrease from 50% to 48.56%.

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  • $\begingroup$ This is the correct answer...assuming an additive model, such as a linear regression. I do believe that is the case here, however. $\endgroup$ – Dave Jun 7 at 21:38
  • $\begingroup$ Yes, I implicitly assumed that. Mostly because of the example of the interpretation that was already given there... Should have included this in my answer anyway. Thanks! $\endgroup$ – Misius Jun 7 at 21:53

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