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st: Panel data: Why does adding group means test for random effects?


From   Amber Katz <academicgirl@gmail.com>
To   statalist@hsphsun2.harvard.edu
Subject   st: Panel data: Why does adding group means test for random effects?
Date   Fri, 25 Feb 2005 18:17:28 -0500

I'm new to the list, but I'm glad I found you all.

I'm testing for random vs. fixed effects, and I've read that another
way to do this is to add group means to the regression.  I don't fully
understand why the coefficient of the group means will be larger if
there is correlation between the variable and the effect.

If you understand this, please help!  Thanks.

Amber
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