Hi,

I am trying to estimate a latent variable (human capital - HC) which has formative indicators eg education, age, gender, etc and a reflective indicator income. Which command would I look into to do this? I originally thought using the SEM builder but now I see that PLSSEM maybe the correct way to go. The theory says I should estimate HC using a linear combination of formative indicators that gives the best fit to the only reflective indicator (income). The other problem I have is that I have both categorical and quantitative indicators. I have converted the categorical indicators to dummy variables. Here the literature says to use MORALS (within the ALSOS methods) to quantify the categorical variables.

It also states that the solutions obtained "by means of the Factor Model are not unique and that the solutions obtained by the PLS Method are not logically consistent" so to overcome these the information embedded in the Path Analysis model should be used. This has now completely confused me as then it seems that PLSSEM should not be used.

Please can you point me in the correct direction of which commands I should be looking into. Or any help please.

Once I have the latent variable HC I am going to use it to look at descriptive statistics as well as to look at the distribution. So this is the reason I want to construct the HC latent variable.

Many thanks! Tamaryn