h0u, t strictly increasing in u for t 0, 1
The random variable Ui represents all unobservable characteristics of individual i. Equation (26) incorporates the idea that the outcome of an individual with Ui u will be the same in a given time period, irrespective of group membership. ∙ The distribution of Ui is allowed to vary across groups, but not over time within groups, so that
DUi|Ti, Gi DUi|Gi.
where Ti is the time period and
The standard DD model can be expressed in this way, with
h0u, t u t
Yi0 h0Ui, Ti,