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Re: st: one way/two way fixed effects


From   David Greenberg <dg4@nyu.edu>
To   statalist@hsphsun2.harvard.edu
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 <valendena@hotmail.it>
Date: Tuesday, December 4, 2007 5:50 pm
Subject: st: one way/two way fixed effects
To: statalist statalist <statalist@hsphsun2.harvard.edu>


> 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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