# st: Dynamic Random Effects Probit Model in Stata 8.2

 From [email protected] To <[email protected]> Subject st: Dynamic Random Effects Probit Model in Stata 8.2 Date Tue, 3 May 2005 07:07:27 +0100

``` I am applying to the British Household Panel Survey data set a variant of
Vella and Verbeek's dynamic model of unionism and wage rate determination
employed in "Whose Wages Do Unions Raise? A Dynamic Model of Unionism and
Wage Determination for Young Men", Journal of Applied Econometrics, 1998.
To deal with the initial conditions problem I am following J Wooldridge's
solution given in "Simple Solutions to the Initial Conditions Problem in
Dynamic, Nonlinear Panel Data Models with Unobserved Heterogeneity", Journal
of Applied Econometrics, 20, pp.20-39 (2005).
I have attempted to implement this approach (for the reduced form union
membership determination equation);in the model provided below new_orgmb0
(eg unioni0 in Wooldridge's example) in other words the initial value of
trade union membership is not included.
This is because I have not really been able to figure out how to specify the
entry into the Initial values box in Stata 8.2 under the maximisation
options heading. The way I attempted to deal with it practically was to
multiply the union membership (indicator variable) by a time dummy eg say
Orgmb0=new_orgmb*T97 (where T97 is a dummy variable taking a value of one if
year=1997 eg the initial annum in my data set) and then insert Orgmb0 in the
box for  Initial values(max options) so that the simple xtprobit command
below would end with re from(orgmb0).
This apparently does not work since I get:

r(111)

=======================================================================

T=97,98,99,00,01,02; TO=97,T1=98...,T5=02

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tsset pid year, yearly
panel variable:  pid, 10016848 to 77605489
time variable:  year, . to 0102, but with gaps
xtprobit new_orgmb new_orgmblag logexper married married1 married2 married3
married4 married5 female black  asian otherethnic lonsoutheast scotland
wales northwest northeast midlands uniqual vocqual  alevels  hlstatdum
hlstatdum1 hlstatdum2 hlstatdum3 hlstatdum4 hlstatdum5 ftemp ftemp1 ftemp2
ftemp3 ftemp4 ftemp5  agforfish exctmanu meteng manuind constr distr tancom
banfin othesevsic profocc assproftech clersec craft perpro plantmach otheocc
T98 T99 T00 T01 T02, re
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