I am looking at the health gap between indigenous and non-indigenous Canadians and am unsure on how to specify and interpret dummy variables. 2 categorical variables I include are occupation status (employed, unemployed, stay at home, retired) and income group (0-$19,999, $20,000-$39,999, $40,000-$59,999, $60,000-$79,999, $80,000 or more). I see these options:
A) oaxaca healthindex occ_* inc_* [aw=weight], by(indigenousstatus) relax
OR
B) oaxaca healthindex normalize(occ_*) normalize(inc_*) [aw=weight], by(indigenousstatus) relax
So my questions are:
1) Should I normalize these variables?
2) How do I interpret the endowments/explained coefficients for these dummies with or without normalize?
My idea would be, if for example the occ_employed coefficient is .1248:
- A) The health gap would decrease by 0.1248 if indigenous people had the same ratio of employed people as compared to the reference category as non-indigenous people.
- B) The health gap would decrease by 0.1248 if indigenous people had the same rate of employment as non-indigenous people.
Does that sound correct?
Thank you very much!!
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