First-Difference Estimator
The First-Difference (FD) estimator is a panel data method that eliminates unobserved, time-invariant individual heterogeneity by subtracting each unit's observation in period t-1 from its observation in period t. By operating on changes rather than levels, FD removes any fixed individual effect that would otherwise confound causal inference. It is widely used in labor economics, program evaluation, and applied microeconomics whenever researchers suspect persistent unobserved differences across individuals, firms, or countries.
Source record
Citations copied verbatim from the method’s source record. No claim-level verification is inferred from them.
- Wooldridge, J. M. (2010). Econometric Analysis of Cross Section and Panel Data (2nd ed.). MIT Press. · ISBN 978-0-262-23258-8
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Related methods
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