Dynamics of Economic and Demographic Behavior: "Clean Processes" From the Panel Study of Income Dynamics (PSID)

Lee A. Lillard, director of the Retirement Research Center at the University of Michigan, senior research scientist at its Institute for Social Research, and professor of economics, developed a unique method for analyzing the rich compendium of data collected by the Panel Study of Income Dynamics (PSID) since its inception in 1968. Lee died in December 2000, and his colleagues at PSID decided to provide the fruits of his work to the research community so others might benefit from an exploration of his techniques and methodologies for analyzing data. Lee created what he called "clean processes" to investigate a number of dynamic behaviors that are measured longitudinally in PSID, such as employment, marriage-divorce, and fertility. He and his programmers and research assistants put these processes into a consistent framework, and made decisions about how to resolve inconsistencies, missing items, etc. Data from the files can be entered, as appropriate, in dynamic econometric models of related and mutually causal processes: for instance, the relationships among marriage, fertility, and female labor supply. Thus, researchers can study various combinations of these behaviors without having to go through complex file creation for each project.