# 2.2 Panel data models  (Page 7/10)

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The estimates of the parameter values for the fixed-effects model are very similar to those found for the random-effects model with the exception for the parameters associated with not living in an SMSA ( not_smsa ) and with living in the South ( south ). The random-effects model suggests that the wage level for someone living outside of a SMSA is 87.6 percent of the wage level of someone living in an SMSA; in the fixed-effects model, the wage level outside the SMSA is estimated to be 91.5 percent of the wage level of a woman living in a SMSA. The random-effects model estimates wages in the South are 91.6 percent the level of wages outside the South; the fixed-effects model fixes this wage premium at 91.6 percent.

The final issue we discuss in this example is the Hausman specification test. If the model is correctly specified and if ν i is uncorrelated with the explanatory variables, then the parameter estimates in the two models should not be statistically different. As shown in Figure 8, we first must same the results of the fixed-effects estimation using the command estimates store fixed_effects . The null hypothesis is that the the difference in that parameter estimates is not systematic. The appropriate test statistic is the χ 2 (8), where the degrees of freedom are equal to the number of parameters in the model (8). The chi-squared statistic of 149.44 is greater than the critical value and we must reject the null hypothesis. The Stata offers this interpretation of this result:

What does this mean? We have an unpleasant choice: we can admit that our model is misspecified—that we have not parameterized it correctly—or we can hold to our specification
being correct, in which case the observed differences must be due to the zero-correlation of and the assumption. [StataCorp: 202]

## Exercises

Estimation of a Labor Supply Function. An important issue in labor economics is the responsiveness of the number of hours worked to wages. Because labor supply curves can, in theory, be backward-bending, the sign and size of the impact of wages on the amount of labor supplied is an empirical issue. In this project you are to estimate the demand for labor curve for a cross-section of adult males.

## The model to be estimated is:

${y}_{it}={\beta }_{0}+{\beta }_{1}{h}_{it}+{\beta }_{2}Ag{e}_{it}+{\beta }_{3}Ag{e}_{it}^{2}+{\beta }_{4}N{C}_{it}+{\beta }_{5}H{I}_{it}+{\epsilon }_{it}$

where:

y it = natural logarithm of individual i ’s wage rate in year t ,

h it = natural logarithm of total number of hours worked by individual i in year t ,

Age it = age of individual i in year t ,

NC it = number of children of individual i in year t , and

HI it = an dummy variable equal to 1 if individual i in year t has bad health and 0 otherwise.

The data are from Ziliak, James P. (1997) “Efficient Estimation with Panel Data When Instruments Are Predetermined: An Empirical Comparison of Moment-Condition Estimators,” Journal of Business&Economic Statistics 15 (4): 419-431. Ziliak (p. 423) describes his data as follows:

The data used to estimate the life-cycle labor-supply parameters come from Waves XII-XXI (calendar years 1978-1987) of the PSID. The sample is selected on many dimensions and is similar to other research studying life-cycle models of labor supply. The sample is restricted to continuously married, continuously working, prime-age men aged 22-51 in 1978 from the Survey Research Center random subsample of the PSID. In addition the individual must either be paid an hourly wage rate or must be salaried, and he cannot be a piece-rate worker or self-employed. This selection process resulted in a balanced panel of 532 men over 10 years or 5,320 observations. The real wage rate, w it ,. is the hourly wage reported by the panel participant rather than the average wage (annual earnings over annual hours) to minimize division bias (Borjas 1981).

what does nano mean?
nano basically means 10^(-9). nanometer is a unit to measure length.
Bharti
do you think it's worthwhile in the long term to study the effects and possibilities of nanotechnology on viral treatment?
absolutely yes
Daniel
how to know photocatalytic properties of tio2 nanoparticles...what to do now
it is a goid question and i want to know the answer as well
Maciej
Abigail
for teaching engĺish at school how nano technology help us
Anassong
Do somebody tell me a best nano engineering book for beginners?
what is fullerene does it is used to make bukky balls
are you nano engineer ?
s.
fullerene is a bucky ball aka Carbon 60 molecule. It was name by the architect Fuller. He design the geodesic dome. it resembles a soccer ball.
Tarell
what is the actual application of fullerenes nowadays?
Damian
That is a great question Damian. best way to answer that question is to Google it. there are hundreds of applications for buck minister fullerenes, from medical to aerospace. you can also find plenty of research papers that will give you great detail on the potential applications of fullerenes.
Tarell
what is the Synthesis, properties,and applications of carbon nano chemistry
Mostly, they use nano carbon for electronics and for materials to be strengthened.
Virgil
is Bucky paper clear?
CYNTHIA
so some one know about replacing silicon atom with phosphorous in semiconductors device?
Yeah, it is a pain to say the least. You basically have to heat the substarte up to around 1000 degrees celcius then pass phosphene gas over top of it, which is explosive and toxic by the way, under very low pressure.
Harper
Do you know which machine is used to that process?
s.
how to fabricate graphene ink ?
for screen printed electrodes ?
SUYASH
What is lattice structure?
of graphene you mean?
Ebrahim
or in general
Ebrahim
in general
s.
Graphene has a hexagonal structure
tahir
On having this app for quite a bit time, Haven't realised there's a chat room in it.
Cied
what is biological synthesis of nanoparticles
what's the easiest and fastest way to the synthesize AgNP?
China
Cied
types of nano material
I start with an easy one. carbon nanotubes woven into a long filament like a string
Porter
many many of nanotubes
Porter
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Yasmin
what is the function of carbon nanotubes?
Cesar
I'm interested in nanotube
Uday
what is nanomaterials​ and their applications of sensors.
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what is system testing?
preparation of nanomaterial
how to synthesize TiO2 nanoparticles by chemical methods
Zubear
what's the program
Jordan
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Jordan
what chemical
Jordan
how did you get the value of 2000N.What calculations are needed to arrive at it
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Good
Berger describes sociologists as concerned with
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