A General Panel Model for Unobserved Time Heterogeneity with Application to the Politics of Mass Incarceration

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Creator
  • Duxbury, Scott W.
    • Affiliation: College of Arts and Sciences, Department of Sociology
Abstract
  • Panel data analysis is common in the social sciences. Fixed effects models are a favorite among sociologists because they control for unobserved heterogeneity (unexplained variation) among cross-sectional units, but estimates are biased when there is unobserved heterogeneity in the underlying time trends. Two-way fixed effects models adjust for unobserved time heterogeneity but are inefficient, cannot include unit-invariant variables, and eliminate common trends: the portion of variance in a time-varying variable that is invariant across cross-sectional units. This article introduces a general panel model that can include unit-invariant variables, corrects for unobserved time heterogeneity, and provides the effect of common trends while also allowing for unobserved unit heterogeneity, time-varying coefficients, and time-invariant variables. One-way and two-way fixed effects models are shown to be restrictive forms of this general model. Other restrictive forms are also derived that offer all the usual advantages of one-way and two-way fixed effects models but account for unobserved time heterogeneity. The author uses the models to examine the increase in state incarceration rates between 1970 and 2015.
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  • Article
Rights statement
  • In Copyright
License
  • Attribution 4.0 International
Journal title
  • Sociological Methodology
Journal volume
  • 51
Journal issue
  • 2
Page start
  • 348
Page end
  • 377
Language
  • English
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  • Publisher
ISSN
  • 0081-1750
Publisher
  • SAGE Publications Inc.

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