# Re: st: one way/two way fixed effects

 From David Greenberg <[email protected]> To [email protected] Subject Re: st: one way/two way fixed effects Date Tue, 04 Dec 2007 19:17:17 -0500

```You have a very small number of regions. The significance tests you are using are unbiased only asymptotically - that is, as the sample size increases without limit. They can be very misleading for small n. You may want to look into panel-corrected standard errors as an alternative that performs better with a small number of cases. David Greenberg, Sociology Dept.l, New York U.

----- Original Message -----
From: valentina p <[email protected]>
Date: Tuesday, December 4, 2007 5:50 pm
Subject: st: one way/two way fixed effects
To: statalist statalist <[email protected]>

> 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
>
> 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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```