Dear Statalist members,
i have a question concerning the command ivreg2.
I am estimating a rudimental fixed effect model, where the dependent
variable is wage, and the independent v. of interest unemployment rate.the
observation units are groups of individuals differentiated by skills. i want
to control for unobserved heterogeneity of the groups.some of my covariates
are constant, and so they get treated as part of the error term.i want to
test the strict exogeneity assumption on the explanatory variables that
underlies the fe/re model by using ivreg2.in particualr i guess that
education, which is constant over time and hence part of the individual
component of the error term,correlates with the unemployment rate.
i used the lag value of unemployment rate as an instrument, and pooled the
data.
is the following command correct?
ivreg2 wage d_educ2-d_educ4 exp /*
*/ unemploym ( = unemploym-1) [aweight=weight],orthog(unemploym)
Thanks for your suggestions,
Max
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