This paper considers the determinants of a binary indicator for the existence of functional limitations using seven waves (1991-1997) of the British Household Panel Survey(BHPS). The focal point of our analysis is a consideration of the relative contributions of state dependence, heterogeneity...

Panel datasets provide a rich source of information for health economists, offering the scope to control for individual heterogeneity and to model the dynamics of individual behaviour. However the qualitative or categorical measures of outcome often used in health economics create special...