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Pooling Cross Sections across Time: Simple Panel Data Methods
Types of Cross Sections across Time
Often loosely use the term panel data to refer to any data set that has both a cross-sectional dimension and a time-series dimension. More precisely it’s only data following the same cross-section units over time. Otherwise it’s a pooled cross-section.
BEE2006 - Statistics and Econometrics
Pooling Cross Sections across Time: Simple Panel Data Methods Wooldridge (2008), Chapter 13
Pooling Independent Cross Sections across Time The Chow Test for Structural Change across Time Policy Analysis with Pooled Cross Sections Two-Period Panel Data Analysis Policy Analysis with Two-Period Panel Data Differencing with More Than Two Time Periods Potential Pitfalls in First Differencing Panel Data
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Pooling Cross Sections across Time: Simple Panel Data Methods
Pooling Independent Cross Sections across Time
Why would we like to use independently pooled cross sections? - to increase the sample size. Pooling is helpful as long as the relationship between the dependent variable and at least some of the independent variables remain constant over time. The typical problem with pooled cross sections is that the population may have different distributions indifferent time periods. Usually we allow the intercept to differ across periods. This is accomplished by including dummy variables for different time periods.
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Pooling Cross Sections across Time: Simple Panel Data Methods
Pooling Independent Cross Sections across Time
We may want to pool cross sections just to get bigger sample sizes. We may want to pool cross sections to investigate the effect of time. We may want to pool cross sections to investigate whether relationships have changed over time.
A panel data (longitudinal data) - we follow the same individuals, families, cities, countries, etc., across time. Example: a panel data set on individual wages, hours, education, etc., collected by randomly selecting people from a population at a given point in time must be followed at several subsequent points in time.
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Pooling Cross Sections across Time: Simple Panel Data Methods
Types of Cross Sections across Time
Two kinds of data sets: An independently pooled cross section - we randomly sample from a large population at different points in time. Example: we can draw a random sample on the selling prices, square footage, number of bathrooms, and so on, of houses sold in a particular metropolitan area.