My data set is structured so that a unique observation is an (id1,
id2, year) triple. Here id1 is a family id, id2 is a child id. I am
interested in running FE models clustering at the family-level. I
would like to run two models, using specific types of within-family
variation:
(1) Y_it - Y_jt = B(X_it - X_jt) + e_it + e_jt
I want the identification of B to come from within-family differences
in X using only children who are observed at the same time t. As I
understand it, if I run the xtreg fe command as is, the identification
will come from within-family differences across time.
(2) Y_ia - Y_ja = B(X_ia - X_ja) + e_a + e_ja
Here, I want to identify B to come from within-family differences in X
using children who are the same age, but not necessarily at the same
time t (unless they are twins).
Is it possible to take advantage of these specific types of
within-family variation by using "if" function in xtreg? Or is it
necessary to build a new data set?
Your help is greatly appreciated,
Don Ruby
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