A moments approach for omitted variables in residential histories and other panel data

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Abstract
This paper reviews the problems of omitted variables in panel data analysis. Results obtained from previous analyses have been shown to be sensitive to the particular parametric forms assumed for the distribution of omitted variables. An alternative non‐parametric approach is described in which the effects of omitted variables enter the model through the non‐central moments of an error term distribution. A reparametrisation ensures that the constraints on the moments of a probability distribution are not violated. The model is applied to data on the residential mobility history of a sample of households in Cardiff, Wales.

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