Dear all,
I just write you to clear me a problem I still do not understand very
well. I have an unbalanced panel of workers, with t=12, where I am
estimating an earning equation. Hence I use age among the explanatory
variables and I put time dummies (from d2 to d12, since one is
collinear of course). When I use xtreg random effects, everything is
ok, while when I use xtreg, fe it drops me a time dummy (hence, time
dummies are from d3 to d12). If I then run the same regression with no
age, it does not drop the time dummy. Anyone of you may help me to
understand why is there this collinearity problem?
many thanks
alessia
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