Instruments in FE model

[Julia Raciniewska]

I have a following question: I want to estimate the impact of increased use of computers by employees on their employment. I have panel data for 11 industries and 11 time periods. As Hausman test suggested I have a correlation between error terms and my regressor, therefore I am using a fixed effects model.
That is:
xtset industry time
xtreg employment computer_use c.using_computer#i.industry degree, fe


However, I thought that actually computer_use (% of employees using a computer) could be endogenous in the sense that the price of the computer could be a good instrument for that.
I have searched in a variety of articles but cannot find an answer to my (potentially stupid) question: if I am using a fixed effect model, does it exclude the option of instrumental variables? Isn't fixed effects already controlling for endogeneity and I should not worry about IV ?

[Carlo Lazzaro]

Julia:
-fe- specification protects from endogeneity issues if they are related to time-invariant predictors, as they are wiped out by the -fe- machinery.
Unfortunately, if endogeneity lurks behind time-variant predictor(s), you should instrument.

[Julia Raciniewska]

Carlo Lazzaro thank you very much for your advice! Is there any test I could perform to check whether I have endogeneity behind time-variant predictor, while I know I need to use fixed effects to control for time-invariant endogeneity anyway?
Also if I suspect endogeneity in my computer_use regressor, where instrument would be the price of computers, what command in Stata should I use?
So far I had:
xtreg employment computer_use c.using_computer#i.industry , fe

[Carlo Lazzaro]

Julia:
see -xtivreg-.
See also: https://www.statalist.org/forums/for...est-panel-data.