How can I handle heterogeneity across individuals in a panel data analysis?

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Lall B. Ramrattan

An old way as described in "Analyzing Panel Data" by Gregory B. Markus, Sage Publication, 1979 is to stratify the data. I attach 2 pages from that source.

Claudio A. Agostini

If you use fixed effects you control for unobserved heterogeneity. Do you have demographic data on the individuals to control for observed heterogeneity?

Marco Vivarelli

You can start with fized and random effects (depending on Hausman test) and then develop a GMM approach. Regards, MV