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  • Clustering standard error when the number of cluster are 11

    Dear All,
    I am conducting a diff-in-diff regression where households in 5 states were affected by a policy after 2005 and households in 6 states were not. I defined treatment at State level.
    My model:
    xtreg depVar treat*PostPol i.time, fe cluster(state) Is this sufficient? if not what can I do better?

    Best regards,
    TG

  • #2
    Tariku:
    11 clusters are too few.
    I'd consider -bootstrap- standard errors.
    Kind regards,
    Carlo
    (Stata 19.0)

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    • #3
      Thank you Carlo. How do I practically conduct bootstrap? My knowledge is truly limited in this area. I really appreciate your insight/suggestion.
      When you say, "11 clusters are too few" does this mean the SE's are unaccountable?

      Best regards

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