EconPapers    
Economics at your fingertips  
 

What you don't see can't hurt you? Panel data analysis and the dynamics of unobservable factors

Monica Hernandez Alava () and Stephen Pudney

No 2011-13, ISER Working Paper Series from Institute for Social and Economic Research

Abstract: We investigate the consequences of using time-invariant individual effects in panel data models when the unobservables are in fact time-varying. Using data from the British Offending Crime and Justice panel, we estimate a dynamic factor model of the occurrence of a range of illicit activities as outcomes of young people's development processes. This structure is then used to demonstrate that relying on the assumption of time-invariant individual effects to deal with confounding factors in a conventional dynamic panel data model is likely to lead to spurious "gateway" effects linking cannabis use to subsequent hard drug use.

New Economics Papers: this item is included in nep-ecm
Date: 2011-05-14
References: View references in EconPapers View complete reference list from CitEc
Citations View citations in EconPapers (1) Track citations by RSS feed

Published

Downloads: (external link)
https://www.iser.essex.ac.uk/research/publications ... ers/iser/2011-13.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:ese:iserwp:2011-13

Ordering information: This working paper can be ordered from
Publications Office, Institute for Social and Economic Research, University of Essex, Wivenhoe Park, Colchester, Essex CO4 3SQ UK
https://www.iser.essex.ac.uk/publications/

Access Statistics for this paper

More papers in ISER Working Paper Series from Institute for Social and Economic Research
Address: Publications Office, Institute for Social and Economic Research, University of Essex, Wivenhoe Park, Colchester, Essex CO4 3SQ UK
Contact information at EDIRC.
Series data maintained by Paul Groves ().

 
Page updated 2014-12-16
Handle: RePEc:ese:iserwp:2011-13