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I'm trying to do research on the effect of job type, working day and job position on income. The model is something like below. I'm using OLS.

Income ~ Gender + Age + Job type + Working day + Job position

Here, Job type, Working day, Job position are dummy variables each coded as

  • Job type(0=Unemployed, 1=Service, 2=Salesman)
  • Working day(0=Unemployed, 1=5 days a week, 2=6days a week, 3=7days a week)
  • Job position(0=Unemployed, 1=Temporary, 2=Permanent)

Here, as you can see, dummy variables are all having same baseline 0=Unemployed.

I am curious that if this can be a problem since information that baseline for all dummy variables containing is same. Can this be a problem?

Daniel Cho
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    These are not dummy variables. See this wiki page for an explanation. Also, check this answer to have a better idea about how to include categorical predictors to your model, especially the part following "(The remark below might be redundant for you, but I add it anyway)" – T.E.G. Jan 02 '18 at 01:51

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