Bookmark and Share

Notice: On April 23, 2014, Statalist moved from an email list to a forum, based at statalist.org.


[Date Prev][Date Next][Thread Prev][Thread Next][Date Index][Thread Index]

Re: st: Problems with FE and Hausman test


From   "John Templeton" <cynic@iname.com>
To   statalist@hsphsun2.harvard.edu
Subject   Re: st: Problems with FE and Hausman test
Date   Wed, 19 Feb 2014 08:57:04 -0500

So then the solution would be start adding dummy variables: 22 for states (23-1) and 2 for time (3-1)?

xtreg PERCENTGRAD IV1 IV2 IV3 IV4 IV5 IV6 IV7 IV8 State1, State2, State3, State4, State5, State6, State7, State8, State9, State10,
State11, State12, State13, State14, State15, State16, State17, State18, State19, State20, State21, State22, Timeis2007, Timeis2008, re
estimates store fixed_group
xtreg PERCENTGRAD IV1 IV2 IV3 IV4 IV5 IV6 IV7 IV8 State1, State2, State3, State4, State5, State6, State7, State8, State9, State10, State11, State12, State13, State14, State15, State16, State17, State18, State19, State20, State21, State22, Timeis2007, Timeis2008, fe
hausman fixed_group

As for the "quality of education factors", my research and the literature presupposes that in fact yes there are such factors, the average teacher salary for example you mentioned. But the education debate and literature in some states has also suggested taking power away from local school boards and giving it to the state board of education may (or may not) be helpful in this regard. One IV, for example, is on the purchase of school texts: can the local board go out and buy whatever it wishes, pick only from a list of books "certified" by the state board of ed, etc. Another is on the power of the state board of education to put a school into administrative receivership/takeover the local school board.

-John

<>
On Feb 19, 2014, at 2:33 AM, John wrote:

> My situation is as follows:
> Dependent Variable: % students graduating high school within 4 years
> Independent Varibles (8): Measures of administrative authority held by state over education matters (vs. local vs. shared). Each measure ranges from 1-30.
> Unit of Anaylsis: States (23)
> Time: 3 years
> Observations: 69
>
> I've been trying to determine if I should account for fixed effects or random or pooled OLS but cannot get a Hausman score.

If these eight measures are time-invariant, they are state-level effects, which explains why they would all be dropped in a fixed effects model. Your model seems to ignore the macro time variation, and should certainly include two time effects.

You could fit a random effects model, but that would suggest that average state-level performance is a random draw from a distribution of quality-of-educatiion factors. That ignores, for instance, that average teachers' salaries in Mississippi might be much lower than those in Massachusetts. We know that paying more doesn't necessarily translate into higher test scores, but I have a hard time believing that Mississippi and Massachusetts students' relative performance on standardized tests is due to random draws, and not something that can be explained by including a number of other relevant, measurable factors from the education literature. How the state oversees local education (and, importantly, funds it) is no doubt important, but it's not the only thing that's important.

Kit

Kit Baum
Professor of Economics and Social Work, Boston College, Chestnut Hill MA, USA
DIW Research Professor, Department of Macroeconomics, DIW Berlin, Berlin, Germany
baum@bc.edu  |  http://ideas.repec.org/e/pba1.html
*
*   For searches and help try:
*   http://www.stata.com/help.cgi?search
*   http://www.stata.com/support/faqs/resources/statalist-faq/
*   http://www.ats.ucla.edu/stat/stata/


© Copyright 1996–2018 StataCorp LLC   |   Terms of use   |   Privacy   |   Contact us   |   Site index