Re: st: xtreg fixed effects

[Chelsea Garneau <chelsealynn.garneau@gmail.com>]

Hi Alexander,

I am running xtreg with children in families, with the majority of the
sample only having 1 child per family.  I have received consultation
in this issue, as it was initially a concern of mine as well.  Though
I can't describe the answer to you in the most sophisticated
statistical language, I do believe that using xt commands will account
for the clustering where it exists, taking into account the variation
within clusters with more than 1 observation.  My model is has a
random effect for variation within families, thus the clustering or
dependency in the data is accounted for by the model and the fixed
effects represent more of a population-average effect which is
interpreted as differences across families, regardless of the size of
the level-2 cluster.

I hope this helps, but my short answer is I believe you are fine and
it is not a mistake.  If you don't want clusters with only 1
observation in the analyses, you will have to take them out yourself.

Best,
Chelsea

On Tue, May 22, 2012 at 10:26 AM, Alexander James
<alexandre_lille-paris@hotmail.com> wrote:
>
> Dear Statalist members,
>
>
>
> I am running a a fixed effect models (xtreg) predicting the share of self citations that firms making in their patents. However, there is one thing that is worring me. I have some observations that appear just once in my database, but when I run the fixed effects they are not droped (they are considered in the model) so I get something like:
>
> Fixed-effects (within) regression Number of obs = 315
>
>
> Group variable: firm_id Number of groups = 159
>
> R-sq: within = 0.3211 Obs per group: min = 1
> between = 0.0512 avg = 2.0
> overall = 0.0092 max = 13
>
> F(27,158) = 16.53
> corr(u_i, Xb) = -0.7005 Prob> F = 0.0000
>
>
> Is this a mistake? how fixed effects model can run on observations that appear only once in the data?
>
>
>
> Best Regards,
>
>
> Alexandre
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