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Are Fixed Effects Fixed?

Author

Listed:
  • Dwyer, Douglas W.

Abstract

In attempts to overcome the problem of omitted variables, the assumption of fixed effects is widely implemented when working with panel data. This paper examines the validity of this technique, in the context of estimating a production function using panels of US textile plants. The hypothesis of fixed effects is tested by estimating a more flexible functional form for the error term's components than is found in the literature. It is shown that what looks loke a "fixed effect" is actually decaying slowly.

Suggested Citation

  • Dwyer, Douglas W., 1997. "Are Fixed Effects Fixed?," Working Papers 97-35, C.V. Starr Center for Applied Economics, New York University.
    • Handle: RePEc:cvs:starer:97-35
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    Cited by:

    1. Douglas W Dwyer, 1995. "Technology Locks, Creative Destruction And Non-Convergence In Productivity Levels," Working Papers 95-6, Center for Economic Studies, U.S. Census Bureau.
    2. Douglas Dwyer, 1998. "Technology Locks, Creative Destruction, and Non-Convergence in Productivity Levels," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 1(2), pages 430-473, April.
    3. repec:cvs:starer:9724 is not listed on IDEAS

    More about this item

    Keywords

    PRODUCTIVITY ; EVALUATION;

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity

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