st: A question about fixed-effect regression

["Hui Wang" <jackie_stata@hotmail.com>]

Hi, All,

Here is a question about the fixed-effect regression. The following is a 
dataset:

id	y	x1	x2
--------------------------
1              4               1              2
1	13	0	6
1	2	0	5
--------------------------
2	5	0	7
2	7	0	9
--------------------------
3	9	1	5
3	10	1	3
3	12	0	1
--------------------------
4	12	1	4
4	15	1	7
--------------------------

I want to estimate the effect of x1 on y (controlling for x2) using fixed 
effect regression. The command is

.iis id
.xtreg y x1 x2, fe

which generates the results:
------------------------------------------------------------------------------
          y |      Coef.   Std. Err.      t    P>|t|     [95% Conf. 
Interval]
-------------+----------------------------------------------------------------
         x1 |  -2.857401   3.369186    -0.85   0.444    -12.21176    
6.496959
         x2 |   .5703971   .8082814     0.71   0.519    -1.673752    
2.814546
      _cons |   7.533755   4.564256     1.65   0.174    -5.138651    
20.20616
-------------+----------------------------------------------------------------


But notice that for id=2 and id=4, x1 does not vary within the same id. If 
the fixed effect realy make use of the

variation within the same id, may be I should exclude these observations. 
The command is:

.xtreg y x1 x2 if id~=2 & id~=4, fe

which generates the results:
------------------------------------------------------------------------------
          y |      Coef.   Std. Err.      t    P>|t|     [95% Conf. 
Interval]
-------------+----------------------------------------------------------------
         x1 |  -2.899497   4.701649    -0.62   0.600    -23.12906    
17.33006
         x2 |   .4020101   1.329827     0.30   0.791    -5.319774    
6.123794
      _cons |   8.309045   5.984222     1.39   0.299    -17.43898    
34.05707
-------------+----------------------------------------------------------------

The coefficient on x1 in these two regressions are closed but not exactly 
the same, so are their standard errors.

My question is: which one make more sense?

Thank you.

Jackie

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