Indicate for which of the following examples you cannot use Entity and Time Fixed Effects: a regression of
A)OECD unemployment rates on unemployment insurance generosity for the period 1980-2006 (annual data).
B)the (log of)earnings on the number of years of education, using the Current Population Survey of 60,000 households for March 2006.
C)the per capita income level in Canadian Provinces on provincial population growth rates, using decade averages for 1960, 1970, and 1980.
D)the risk premium of 75 stocks on the market premium for the years 1998-2006.

Question

Quizplus · Accepted Answer

In option B, the data is cross-sectional (from a single point in time, March 2006) and does not span multiple time periods or entities (like countries or firms over years), which are necessary for employing both entity and time fixed effects. Entity and time fixed effects require panel data, which includes observations across both multiple entities and multiple time periods.

Indicate for Which of the Following Examples You Cannot Use