7. Fixed-Effects Negative Binomial Regression Models

This paper demonstrates that the conditional negative binomial model for panel data, proposed by Hausman, Hall, and Griliches (1984), is not a true fixed-effects method. This method—which has been implemented in both Stata and LIMDEP—does not in fact control for all stable covariates. Three alternative methods are explored. A negative multinomial model yields the same estimator as the conditional Poisson estimator and hence does not provide any additional leverage for dealing with over-dispersion. On the other hand, a simulation study yields good results from applying an unconditional negative binomial regression estimator with dummy variables to represent the fixed effects. There is no evidence for any…