From the course: Advanced and Specialized Statistics with Stata

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Linear panel estimators demo

Linear panel estimators demo - Stata Tutorial

From the course: Advanced and Specialized Statistics with Stata

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Linear panel estimators demo

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- [Tutor] I've already opened the analyst work data that comes as part of this session and set it to panel data using the xtset command. Let's begin by estimating a pooled ordinarily squares regression model. Let's assume for a moment that we're interested in the effect of age and college graduation on log wages. We can run a pooled OLS model by calling the regress command and then using the cluster option. Let me show you, regress log wage is a function of age and the variable college grad. Now, we need to invoke the cluster option for this. This is important because the repeated nature of observations leads to something called error correlation and this can artificially create low standard errors. In other words, this can make you think that too many variables are statistically significant. By using the cluster option, we can overcome this problem and we need to specify the ID variable in the cluster option, which in…

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