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st: Re:Grouping data/Probability Transition Matrix

From   tunmise jones <>
Subject   st: Re:Grouping data/Probability Transition Matrix
Date   Tue, 3 Apr 2012 02:20:00 +0100

Hello All,

I am currently working with a balanced panel dataset of companies over a period
of 9 years (1991-1999) to track employment growth over the period.

I would like to group firms into 4 size classes based on size
(employment) in 1991. Based on the size classes, I ran the following

gen InitialSize=0
Replace InitialSize=1 if emp<10& !mi(emp) & year==1991
Replace InitialSize=2 if emp>=10& emp<50& year==1991
Replace InitialSize=3 if emp>=50& emp<250 & year==1991
Replace InitialSize=4 if emp>=250& & year==1991

and obtained a four category dummy variable. I tried to group the
entire dataset based on these categories and run separate regressions
for each size class. It would appear observations for the regressions
are only being limited to this sub-sample of firms in the first year.

Following the above commands,

1. How can I classify all the firms into size classes based on their
initial size (1991 size)?
2. Following from this, how can I estimate transition probability
matrix for 1991 and 1999 to track firm mobility across the 4 size

I'll appreciate all the help I can get.


Tunmise Jones
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