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Computing Person and Firm Effects in Linked Data (CG2)

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For a while, researchers at LEHD and CISER have been using methods that improve on Abowd, Kramarz, and Margolis (Econometrica, 1999) to compute high-dimensional person and firm effects. The newer methodology still requires large amounts of memory (for the typical application), but given the dimensionality, is efficient in its use of memory because of the use of sparse matrixes. The methodology is outlined in Abowd, Creecy, and Kramarz (2002) (local copy), and the software used to compute the effects (generally referred to as CG2) can be found on this server. A core application to the LEHD data is described in Abowd, Lengermann, and McKinney (2003) (local copy) Census RDC in the near future.