The project will develop estimators of limited dependent variable models, also known as Tobit models, with fixed effects. Individually, fixed effects models and Tobit models are frequently used in empirical economics. A Tobit model with fixed- effects is implied by a structural life cycle model of labor supply and many other models, and is of interest as a reduced form specification. It is desirable to have asymptotic results for fixed effects estimators as the number of individuals increases (with the number of observations per individual fixed). No current estimators for Tobit models with fixed effects are asymptotically normal, or even consistent, as the number of individuals gets large. The project will solve this problem and at the same time relax some of the distributional assumptions. The efficiency of the estimators that are constructed will also be examined. The research will be supplemented with simulations. Given the availability of important panel data sets in economics, the development of these estimators will improve the estimation of many important types of economic models, especially in the area of labor economics.
