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New methods to estimate models with large sets of fixed effects with an application to matched employer-employee data from Germany

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Author Info

  • Mittag, Nikolas

Abstract

"This paper will introduce new methods to estimate the two-way fixed effects model and the match effects model in datasets where the number of fixed effects makes standard estimation techniques infeasible. The methods work for balanced and unbalanced panels and increase the speed of estimation without imposing excessive computational demands. I will apply the methods to a new and unusually detailed matched employer-employee dataset from Germany. The analysis shows that the omission of match effects leads to biased inference particularly concerning the effects of individual characteristics and underlines the importance of accurate biographic data." (Author's abstract, IAB-Doku) ((en)) Additional Information Program files

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File URL: http://doku.iab.de/fdz/reporte/2012/MR_01-12_EN.pdf
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Bibliographic Info

Paper provided by Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany] in its series FDZ Methodenreport with number 201201_en.

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Length: 63 pages
Date of creation: 12 Mar 2012
Date of revision:
Handle: RePEc:iab:iabfme:201201_en

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Related research

Keywords: Arbeitsmarktforschung; IAB-Linked-Employer-Employee-Datensatz; Arbeitsmarktmodell; Schätzung; matching; empirische Forschung; Panel; Berufsverlauf; Längsschnittuntersuchung; Algorithmus;

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References

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  1. A. Colin Cameron & Jonah B. Gelbach & Douglas L. Miller, 2007. "Bootstrap-Based Improvements for Inference with Clustered Errors," NBER Technical Working Papers 0344, National Bureau of Economic Research, Inc.
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  5. Abowd, J.M. & Kramarz, F. & Margolis, D.N., 1995. "High-Wage Workers and High-Wage Firms," Cahiers de recherche 9503, Universite de Montreal, Departement de sciences economiques.
  6. Topel, Robert H & Ward, Michael P, 1992. "Job Mobility and the Careers of Young Men," The Quarterly Journal of Economics, MIT Press, vol. 107(2), pages 439-79, May.
  7. Abowd, John M. & Kramarz, Francis, 1999. "The analysis of labor markets using matched employer-employee data," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 40, pages 2629-2710 Elsevier.
  8. Abowd, John M. & Kramarz, Francis, 1999. "Econometric analyses of linked employer-employee data," Labour Economics, Elsevier, vol. 6(1), pages 53-74, March.
  9. Jacobebbinghaus, Peter, 2008. "LIAB-Datenhandbuch, Version 3.0," FDZ Datenreport. Documentation on Labour Market Data 200803_de, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
  10. Simon D. Woodcock, 2007. "Wage Differentials in the Presence of Unobserved Worker, Firm, and Match Heterogeneity," Discussion Papers dp07-10, Department of Economics, Simon Fraser University.
  11. Francis Kramarz & Stephen Machin & Amine Ouazad, 2009. "What Makes a Test Score? The Respective Contributions of Pupils, Schools and Peers in Achievement in English Primary Education," CEE Discussion Papers 0102, Centre for the Economics of Education, LSE.
  12. Simon D. Woodcock, 2007. "Match Effects," Discussion Papers dp07-13, Department of Economics, Simon Fraser University.
  13. A. Colin Cameron & Jonah B. Gelbach & Douglas L. Miller, 2006. "Robust Inference with Multi-way Clustering," NBER Technical Working Papers 0327, National Bureau of Economic Research, Inc.
  14. Martyn Andrews & Thorsten Schank & Richard Upward, 2006. "Practical fixed-effects estimation methods for the three-way error-components model," Stata Journal, StataCorp LP, vol. 6(4), pages 461-481, December.
  15. Michael C. Lovell, 1963. "Seasonal Adjustment of Economic Time Series and Multiple Regression," Cowles Foundation Discussion Papers 151, Cowles Foundation for Research in Economics, Yale University.
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  18. Wansbeek, Tom & Kapteyn, Arie, 1989. "Estimation of the error-components model with incomplete panels," Journal of Econometrics, Elsevier, vol. 41(3), pages 341-361, July.
  19. C. Kirabo Jackson, 2013. "Match Quality, Worker Productivity, and Worker Mobility: Direct Evidence from Teachers," The Review of Economics and Statistics, MIT Press, vol. 95(4), pages 1096-1116, October.
  20. Jeffrey Grogger & Gordon H. Hanson, 2008. "Income Maximization and the Selection and Sorting of International Migrants," NBER Working Papers 13821, National Bureau of Economic Research, Inc.
  21. Dale T. Mortensen, 1978. "Specific Capital, Bargaining, and Labor Turnover," Discussion Papers 320, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
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  23. John M. Abowd & Robert H. Creecy & Francis Kramarz, 2002. "Computing Person and Firm Effects Using Linked Longitudinal Employer-Employee Data," Longitudinal Employer-Household Dynamics Technical Papers 2002-06, Center for Economic Studies, U.S. Census Bureau.
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