Hi to everyone,I have data of 15 regions over 15 years and I am trying to understand which model to use to estimate the impact of immigration on per capita income. Now I have to choose between a one-way and a two-way fixed effects model.
For this reason, I have two big "groups of question" (sorry in advance).
1)To control for regions and time I suppose that a two-way fixed effects model can be useful, but I do not know the commands for stata.
I have read an example in a manual like:
xtreg lc ly lpl lpm year2-year11, re
dropped year1, which becomes the reference.
Then the results are
coef. P>|z|
ly .7409992 0.000
lpl .1669597 0.026
lpm .666226 0.000
year2 .0464402 0.019
year3 -.0744206 0.036
|
|
year11 -.0460081 0.740
_cons 2.4982631 0.002
whith the respective coefficients.
How can I interpret them and the constant term? I refer most of all to the coeffs of year2-year11.
In which sense can I interpret them like variations from the year1? I mean...what does this explain? which effects?
and how can I interpret the rule of(in the example let it be) ly, the variable which I am principally studying?
2) Apart from this, if used a one way fixed effect model like xtreg y x1 x2 ... ,fe would it be necessary to make an analysis of the residuals? If yes, through which commands?
Many many thanks to everyone who could help me
val
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