It's not a problem, and is in fact a recommendation originally
offered by Arellano (1987). Wooldridge's 2002 book discusses it (I
don't have it handy or I would look up the page ref).
You do need to be sure that you have enough clusters for the
asymptotics to be plausible, but this is a general issue with cluster-
robust and not specific to fixed effects models.
Hope this helps.
--Mark
To: [email protected]
From: Phil Ender <[email protected]>
Subject: st: areg question
Date sent: Mon, 25 Apr 2005 17:29:00 -0700
Send reply to: [email protected]
> Dear Statalist,
>
> A student came in with an -areg- model in which the same variable was
> used in both the absorb option and cluster option, sorta like this
>
> areg dv iv1 iv2, absorb(id) cluster(id)
>
> I thought this was a bad idea but could not find a specific reference
> prohibiting it. Can someone point me to a reference about the
> problem or provide an explanation of why it is not a problem.
>
> Phil
> --
> Phil Ender
> UCLA Department of Education
> UCLA Academic Technology Services
>
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Prof. Mark E. Schaffer
Director
Centre for Economic Reform and Transformation
Department of Economics
School of Management & Languages
Heriot-Watt University, Edinburgh EH14 4AS UK
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