Estimation of Panel Data Models with Binary Indicators when Treatment Effects are not Constant over Time

Audrey Laporte and Frank Windmeijer

Working Papers from University of Toronto, Department of Economics

Abstract: We show that two commonly employed estimation procedures to deal with correlated unobserved heterogeneity in panel data models, within-groups and first-differenced OLS, can lead to very different estimates of treatment effects when these are not constant over time and treatment is a state that only changes occasionally. It is therefore important to allow for flexible time varying treatment effects when estimating panel data models with binary indicator variables as is illustrated by an example of the effects of marital status on mental wellbeing.

Keywords: panel data; treatment effects. (search for similar items in EconPapers)
JEL-codes: C23 C51 (search for similar items in EconPapers)
Pages: 10 pages
Date: 2005-03-11
New Economics Papers: this item is included in nep-ecm
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Citations: View citations in EconPapers (87)

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Journal Article: Estimation of panel data models with binary indicators when treatment effects are not constant over time (2005)
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Persistent link: https://EconPapers.repec.org/RePEc:tor:tecipa:laporte-04-01

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