The specification of dynamic discrete-time two-state panel data models

Tue Gørgens and Dean Robert Hyslop

This paper compares two approaches to analyzing longitudinal discrete-time binary outcomes. Dynamic binary response models focus on state occupancy and typically specify low-order Markovian state dependence. Multi-spell duration models focus on transitions between states and typically allow for state-specific duration dependence. We show that the former implicitly impose strong and testable restrictions on the transition probabilities. In a case study of poverty transitions, we show that these restrictions are severely rejected against the more flexible multi-spell duration models.

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Year of publication:	2019
Authors:	Gørgens, Tue ; Hyslop, Dean Robert
Published in:	Econometrics : open access journal. - Basel : MDPI, ISSN 2225-1146, ZDB-ID 2717594-7. - Vol. 7.2019, 1/1, p. 1-16
Subject:	panel data \| transition data \| binary response \| duration analysis \| event history analysis \| dynamic models \| censored data \| initial conditions \| random effects \| Panel \| Panel study \| Theorie \| Theory \| Statistische Bestandsanalyse \| Duration analysis \| Schätzung \| Estimation \| Mikroökonometrie \| Microeconometrics