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ISER Working Paper Series, Institute for Social and Economic Research (ISER), University of Essex >
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http://hdl.handle.net/10419/65953
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| Title: | | What you don't see can't hurt you? Panel data analysis and the dynamics of unobservable factors  |
| Authors: | | Hernández, Mónica Pudney, Stephen |
| Issue Date: | | 2011 |
| Series/Report no.: | | ISER Working Paper Series 2011-13 |
| 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. |
| Subjects: | | Panel data Dynamic factor models Individual effects Illicit drugs Crime Gateway effect |
| JEL: | | C33 I18 K42 |
| Document Type: | | Working Paper |
| Appears in Collections: | | ISER Working Paper Series, Institute for Social and Economic Research (ISER), University of Essex
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