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In linear models and particularly in ANOVA, a contrast is a linear combination of parameters with coefficients summing up to zero. It is used to test the corresponding null hypothesis. Contrasts are especially often used with categorical predictors (factors) to make comparisons among the groups (categories). [See also tag 'categorical-encoding']
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Using an overall category as a reference group for dummy variables
I have data on the unemployment rate within 3 education groups for different states, and some other continuous data on for the given states e.g. GDP. I also have the overall unemployment rate for the …