1. I am working on some research relative to females unemployment, and want to use the Multilevel Modelling techniques, but when my residual variance is .043 for an empty model, I include some explanatory variables for level-1 then it would increase. Now, I could not interpret it. Please guide me how to interpret it, and also if it becomes smaller, then whether it would be better off if it increases.
Some results are attach for your information.
2. Is there any criteria for the selection of the explanatory variables to be included for level-2 ?