Hi,
I have a groups of individuals coming from differnt countries. Those individuals change their behavior over time and put effort depending on the incentives provided. I regress effort on salaries and put individual dummies as salaries changed from year one to two. If my reasoning is correct, then individual dummies help to capture personal unobservables.
When I replicate a regression from a publication, They do a similar regression of effort on salaries with individual and country dummies at the same time. Is that actually possible/necessary? Since the unobservables are already captured by the individual dummies what should the country dummies capture? (Notice, individuals do not change the country).
The regression is the following:
reg Effort Salaries i.individual i.year i.country, vce(clustering country)
Thanks,
Christian
I have a groups of individuals coming from differnt countries. Those individuals change their behavior over time and put effort depending on the incentives provided. I regress effort on salaries and put individual dummies as salaries changed from year one to two. If my reasoning is correct, then individual dummies help to capture personal unobservables.
When I replicate a regression from a publication, They do a similar regression of effort on salaries with individual and country dummies at the same time. Is that actually possible/necessary? Since the unobservables are already captured by the individual dummies what should the country dummies capture? (Notice, individuals do not change the country).
The regression is the following:
reg Effort Salaries i.individual i.year i.country, vce(clustering country)
Thanks,
Christian
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