Dear Profs and Colleagues,
This model has faced criticism on several fronts (purple text), and I require assistance in understanding and addressing these critiques.
The variable yi,s,d,t represents the outcome of a specific firm i in a particular sector s, district d, and year t. The time period under consideration spans from 2010 to 2019. The symbols Φt, Φs and Φd represent year, sector-specific and region-specific fixed effects, respectively.
Firstly, in the context of human capital, it seems reasonable to consider human capital at the regional level as a control variable. If this is not taken into account, the proportion of immigrants at the regional level may inadvertently capture some of the broader effects of general human capital. What does it mean and how can I adjust the model according to this point?
Secondly, there is a concern regarding the variation in dependent variables across firms, while explanatory variables vary within regions but remain constant for all firms within a given region. The mixed approach, involving regional factors in the explanatory matrix (X') and firm-specific factors in the dependent vector (y), is drawing criticism from referees due to the inclusion of fixed effects by region on the right-hand side (RHS) of the regressions. I seek guidance on how to interpret these critiques and make adjustments to the equation accordingly. I really don't know whats the problem. regional level? shall i remove the region from the equation? or ...
Cheers,
Paris
This model has faced criticism on several fronts (purple text), and I require assistance in understanding and addressing these critiques.
The variable yi,s,d,t represents the outcome of a specific firm i in a particular sector s, district d, and year t. The time period under consideration spans from 2010 to 2019. The symbols Φt, Φs and Φd represent year, sector-specific and region-specific fixed effects, respectively.
Firstly, in the context of human capital, it seems reasonable to consider human capital at the regional level as a control variable. If this is not taken into account, the proportion of immigrants at the regional level may inadvertently capture some of the broader effects of general human capital. What does it mean and how can I adjust the model according to this point?
Secondly, there is a concern regarding the variation in dependent variables across firms, while explanatory variables vary within regions but remain constant for all firms within a given region. The mixed approach, involving regional factors in the explanatory matrix (X') and firm-specific factors in the dependent vector (y), is drawing criticism from referees due to the inclusion of fixed effects by region on the right-hand side (RHS) of the regressions. I seek guidance on how to interpret these critiques and make adjustments to the equation accordingly. I really don't know whats the problem. regional level? shall i remove the region from the equation? or ...
Cheers,
Paris
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