Correlated random effects models

To learn more about correlated random effects model including code examples of their estimation in R and Stata, check out our Organizational Research Methods article:

[krankerstern]

Hi, thank you for the great video, I was relieved to find a simple explanation about what CREs are. One further question though: what other assumptions must hold in CRE? The ones from Fixed Effects, like parallel trends assumption, too? Is there any publication going into detail about the CRE assumptions?

[serenagallo]

Thank a lot for your precious explanation. I have a balanced panel data N=12 T=5, and I adopted CRE approach...But how fix for endogeneity?

[siddharthkaushal]

Thank You Mikko, this is a very helpful video! :) I am using correlated random effects in my research. I am facing one challenge. I get the same within effect coefficient for fixed effect and correlated random effect model when I do not include year dummies in my equation. However, when I include year dummies (and also the average value of the dummies) in the equations, I get different within effect coefficients between the fixed effects and the correlated random effects model. Would you be able to help me understand why this happens? Regards, Siddharth

[hisokabeatbox]

Dear Mr. Rönkkö, Thank you for the video. I have clustered cross-sectional data, that is, a certain number of households for a certain number of countries.I want to investigate the effects of a variable x that is constant within a country (so it is the same for every household of the same country, but differs for each country) on a consumption variable (that differs for every household). I have reason to believe that my independent variable of interest x is correlated with unobserved country charactersitics, but since it is the same for every household within a country I cannot use FE. I could use RE to include this country-constant variable, however, this would violate the assumption of no correlation between the unobserved and my x. It seems I also cannot use the CRE approach as I cannot add the country-mean of x since x is country-constant. Did I get this right, or is there a way to still consistently estimate this model?

[TrustGangaidzo]

Great summary, thank you. Can one include time dummies in the correlated random effects model (CRE) whether in an unbalanced panel or balanced panel data?

[terrort]

what is the command for the correlated random effects model

[arpansagar]

Do correlated random effects require balanced panels or work just fine with unbalanced panels as well?

[AfricanHope]

Can I use CRE on cross sectional data? I’d appreciate your response. Thank you!