Ridge Regression for Panel Data Analysis

Hi, I am doing a unit-fixed effects panel data analysis to examine the relationship between income and education for 26 regions over 9 years. My dependent variable is Gini, independent variables are proportion of graduates from various levels of education to total population and my controls are regional GDP, regional CPI, regional unemployment, regional LFPR and net migration rate. However, my model suffers from multicollinearity. I've been looking at regularisation techniques and want to use Ridge but I am not sure if it is suitable for panel data. Can anyone give me advice/recommendations on this please? Thanks very much in advance!!


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Kav10 Kav10
  • @ Kav10: Please respond to Skalonga dispute reason below.

    • Kav10 Kav10

      @Judge Robinson, what can I respond to a dispute reason like this? Unfortunately, there are some users (mostly new) on this platform who either want to take advantage of the dispute option to the amount possible or don’t want to pay at all. Not sure about this user, but I’ve seen a lot of those cases recently. By writing this comment, I have already spent my time worth double the bounty of this question.

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