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Re: st: fixed effects with almost time invariant dummies

From   "Ingo Brooks" <>
Subject   Re: st: fixed effects with almost time invariant dummies
Date   Mon, 28 May 2007 20:12:11 +0200


Why don't you rely on the Hausman-Taylor approach when estimating your
model? In Stata type -help xthtaylor-.


On 5/28/07, alessia matano <> wrote:
Hi to all,

I have a real difficult question for all of you. A question that many
econometrics did not know how to answer me.
My question concerns fized effects and random effects estimates.
I have a panel of workers and i regress the wages against a series of
variables, included dummy of sector and regions of their workplace.
These variables appear fundamental to the estimation (i.e. if I take
them off a lot of other variables estimtes get not significant).
So then I do fixed effects estimations, and of course the dummy are
only identified when someone changes region or sector, so they are
identified for a subgroup of workers.
That means that also the other estimates get involved in these
problem: i.e are they affected by the fact that these variabvles are
identified only for a subgroup of workers??
What should I do then? Here my propose:
1. Create a dummy interacting time with dummy
2. Trying to estimate the same equation only for the subgroup of
workers which changes region or sector
3. Trying to estimate it for the other workers, those which do not
chnage region or sector.

How could I then compare these estimates with the random??

Thanks, many thanks for your attention
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