Panel Study of Income Dynamics--Uses for the Small Business Researcher

The Panel Study of Income Dynamics (PSID) deserves entrepreneurship researchers' particular attention because it is a decades-old dataset that allows for cross-sectional, longitudinal and intergenerational analyses of both individuals and families. Originally designed to study the effects of internal and external factors on family economics, the PSID is today supplemented with studies of marriage, adoption, money transfers, and health care costs. While the data collection may be complex to use (the data collected from studies of 7,000 families may be too extensive for software packages to handle) the truly longitudinal nature of the data could assist researchers in determining how and why individuals choose to embark on entrepreneurial projects. The chapter provides information about: the historical background of the PSID; the Core data named "The Study of Family Economics" which remains stable each year, and its sample and instrumentation; the various Supplemental Studies which have been added since 1985; study validation; the data gathering methodology; and the data coding methodology. Five studies based upon the PSID are briefly described. Opportunities that the data offers to the entrepreneurship researcher, as well as caveats in the use of data are discussed. The support available to researchers is also outlined, including codebooks, a user guide, a data center, and a web site.(LMH)