ABSTRACT
Longitudinal or panel data refers to data where we have observations on the same cross section of individuals, households, industries, etc., over multiple periods of time. Often the panel data is short in the sense that the cross-sectional units are available for a period of 2 to 10 years. Some panel data sets are rotating panels where a proportion of cross-sectional units is kept for revisits, while the remaining is replaced by new cross-sectional units. Among the most analyzed panel data are the Michigan Panel Study of Income Dynamics (PSID) and the National Longitudinal Surveys of Labor Market Experience (NLS) in the United States, the International Crops Research Institute for the Semi-Arid Tropics Village Level Studies (ICRISAT VLS) in Hyderabad, India, and the Living Standards Surveys (LSS) in Cote d'Ivoire. Recent years have witnessed a significant growth in the availability of the panel data (Borus 1982, kdtenfelter and Solon 1982, Deaton 1994). The drive behind this growth stems from the fact that the panel data helps to study dynamics of the individual cross-sectional units. It is useful for studying intertemporal and intergenerational behavior of the cross-sectional units. From the inference point of view panel data leads to efficiency gains in the econometric estimators. For details on advantages and problems with the panel data, see Hsiao (1985), Klevmarken (1989), and Deaton (1994).
