What you don't see can't hurt you? Panel data analysis and the dynamics of unobservable factors
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.Â 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.
|Date of creation:||14 May 2011|
|Contact details of provider:|| Postal: Publications Office, Institute for Social and Economic Research, University of Essex, Wivenhoe Park, Colchester, Essex CO4 3SQ UK|
Web page: https://www.iser.essex.ac.uk/
More information through EDIRC
|Order Information:|| Postal: Publications Office, Institute for Social and Economic Research, University of Essex, Wivenhoe Park, Colchester, Essex CO4 3SQ UK|
Web: https://www.iser.essex.ac.uk/publications/ Email:
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Stephen Pudney, 2003. "The Road to Ruin? Sequences of Initiation to Drugs and Crime in Britain," Economic Journal, Royal Economic Society, vol. 113(486), pages 182-198, March.
- Arellano, Manuel & Bover, Olympia, 1995.
"Another look at the instrumental variable estimation of error-components models,"
Journal of Econometrics,
Elsevier, vol. 68(1), pages 29-51, July.
- M Arellano & O Bover, 1990. "Another Look at the Instrumental Variable Estimation of Error-Components Models," CEP Discussion Papers dp0007, Centre for Economic Performance, LSE.
- James Heckman & Flavio Cunha, 2007. "The Technology of Skill Formation," American Economic Review, American Economic Association, vol. 97(2), pages 31-47, May.
- James Heckman & Pedro Carneiro & Flavio Cunha, 2004. "The Technology of Skill Formation," 2004 Meeting Papers 681, Society for Economic Dynamics.
- Flavio Cunha & James Heckman, 2007. "The Technology of Skill Formation," NBER Working Papers 12840, National Bureau of Economic Research, Inc.
- Cunha, Flavio & Heckman, James J., 2007. "The Technology of Skill Formation," IZA Discussion Papers 2550, Institute for the Study of Labor (IZA).
- van Ours, Jan C., 2003. "Is cannabis a stepping-stone for cocaine?," Journal of Health Economics, Elsevier, vol. 22(4), pages 539-554, July.
- van Ours, J.C., 2001. "Is Cannabis a Stepping Stone for Cocaine?," Discussion Paper 2001-98, Tilburg University, Center for Economic Research.
- van Ours, J.C., 2003. "Is cannabis a stepping stone for cocaine?," Other publications TiSEM c1213d1c-a542-4627-938c-7, Tilburg University, School of Economics and Management.
- van Ours, Jan C, 2001. "Is Cannabis a Stepping-Stone for Cocaine?," CEPR Discussion Papers 3116, C.E.P.R. Discussion Papers.
- Stephen Pudney, 2010. "Drugs policy: what should we do about cannabis?," Economic Policy, CEPR;CES;MSH, vol. 25, pages 165-211, 01.
- James J. Heckman & Jora Stixrud & Sergio Urzua, 2006. "The Effects of Cognitive and Noncognitive Abilities on Labor Market Outcomes and Social Behavior," Journal of Labor Economics, University of Chicago Press, vol. 24(3), pages 411-482, July.
- James J. Heckman & Jora Stixrud & Sergio Urzua, 2006. "The Effects of Cognitive and Noncognitive Abilities on Labor Market Outcomes and Social Behavior," NBER Working Papers 12006, National Bureau of Economic Research, Inc.
- Goffe, William L. & Ferrier, Gary D. & Rogers, John, 1994. "Global optimization of statistical functions with simulated annealing," Journal of Econometrics, Elsevier, vol. 60(1-2), pages 65-99.
- Jeffrey DeSimone, 1998. "Is Marijuana a Gateway Drug?," Eastern Economic Journal, Eastern Economic Association, vol. 24(2), pages 149-164, Spring.
- David Roodman, 2009. "A Note on the Theme of Too Many Instruments," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 71(1), pages 135-158, 02.
- David Roodman, 2007. "A Note on the Theme of Too Many Instruments," Working Papers 125, Center for Global Development.
- Windmeijer, Frank, 2005. "A finite sample correction for the variance of linear efficient two-step GMM estimators," Journal of Econometrics, Elsevier, vol. 126(1), pages 25-51, May. Full references (including those not matched with items on IDEAS)
When requesting a correction, please mention this item's handle: RePEc:ese:iserwp:2011-13. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Jonathan Nears)
If references are entirely missing, you can add them using this form.