st: Panel earnings data and coding of time varying indeps

["Christer Thrane" <ch-thran@online.no>]

Hi,

In my yearly panel data I follow a number of college undergraduates for 
about ten years after they graduate. Each year after graduation their yearly 
earnings are recorded along with a binary variable (called MOREED) that 
indicates whether or not they were enrolled in "above-undergraduate" 
education in that year (1 = yes, 0 = no). Thus, if a person during the time 
period first works full-time for three years after graduation before going 
to the university for two more years and then return to working full-time, 
he or she will have the following panel sequence for the variable MOREED:

0 (year 1), 0 (year 2), 0 (year 3), 1 (year 4) 1 (year 5), 0, 0, 0, 0, and 0 
(year 6, 7, 8, 9, and 10).

When I, using -xtreg, re-, model log earnings as function of MOREED and 
controls, the former coefficient is large, negative and significant. I guess 
this makes sense--in the same year as a person goes to school, he or she 
does not have (enough) time to work full-time.

On the other hand, common sense suggests that increasing ones knowledge (by 
taking up more education) should "pay off" in the longer run. In other 
words, MOREED should be positive. In this respect, I'm wondering if maybe 
the problem is the coding of the variable MOREED. From year 5 to 6, this 
variable changes its value back from 1 to 0. And although this "makes sense" 
in the data, it does, in my opinion, not make sense in reality--you cannot 
"go back" from, say, being a graduate to being an undergraduate. My question 
therefore becomes:

How can I change the variable MOREED so that it keeps the value of 1 in the 
remaining panels after it gets a 1 for the first time.

Any insights is appreciated!

Best regards,

Christer Thrane


*
*   For searches and help try:
*   http://www.stata.com/support/faqs/res/findit.html
*   http://www.stata.com/support/statalist/faq
*   http://www.ats.ucla.edu/stat/stata/