ADVANTAGES OF PANEL DATA

A longitudinal, or panel, data set is one that follows a given sample of individuals over time, and thus provides multiple observations on each individual in the sample. Panel data have become widely available in both the developed and developing countries. For instance, in the U.S., two of the most prominent panel data sets are the National Longitudinal Surveys of Labor Market Experience (NLS) and the University of Michigan's Panel Study of Income Dynamics (PSID).

The NLS began in the mid-1960s. It contains five separate longitudinal data bases covering distinct segments of the labor force: men whose ages were 45 to 59 in 1966, young men 14 to 24 in 1966, women 30 to 44 in 1967, young women 14 to 24 in 1968, and youth of both sexes 14 to 21 in 1979. In 1986, the NLS expanded to include surveys of the children born to women who participated in the National Longitudinal Survey of Youth 1979. The list of variables surveyed is running into the thousands, with the emphasis on the supply side of the labor market. Table 1.1 summarizes the NLS survey groups, the sizes of the original samples, the span of years each group has been interviewed, and the current interview status of each group (for detail, see NLS Handbook 2000, U.S. Department of Labor, Bureau of Labor Statistics).

The PSID began with collection of annual economic information from a representative national sample of about 6,000 families and 15,000 individuals in 1968 and has continued to the present.