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Research Article Open access CC BY 4.0

Tweedie Model for Analyzing Zero-Inflated Continuous Response: An Application to Job Training Data

Nabila Parveen, Muhammad Abu Shadeque Mullah, Mohammad Ahshanullah

Journal of Economics, Management and Trade · pp. 1–7 · Published 9 Jul 2016

10.9734/BJEMT/2016/26043

Abstract

Continuous data with substantial proportion of zero values arise often in many disciplines. Modeling such zero-inflated data is always challenging. We use Tweedie model to analyze zero-inflated continuous outcome with a view to evaluate the effect of job training on future earnings, and also on the difference between pre- and post-training earnings. We further assess the effect of pre-training earnings on the post-training earnings. We used data from a job training program in the USA where 445 subjects were followed for three years. Results suggest that job training has statistically significant impact (p-value <0.05) on future earnings, as well as on the change in pre- and post-training earnings. The effect of pre-training earnings on post-training earnings is however not found to be statistically significant. We found the Tweedie model to be particularly suitable for analyzing zero-inflated data to make valid statistical inference.

Zero-inflated data Tweedie model job training and future earning

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