Fixed Effects Models

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    • 00:02

      RYAN YEUNG: Hello.My name is Ryan Yeung, and I'm an assistant professorof public administration at the College of Brockport StateUniversity of New York.I wrote this chapter on fixed effects modelsas part of the Encyclopedia of Education Economics and Financewith Phuong Nguyen of the University of Iowa.You may be wondering, what are fixed effects models?Before we can answer that question,

    • 00:23

      RYAN YEUNG [continued]: though, it behooves us to answer why we need fixed effectsmodels for.Fixed effects models help us to addressthe problem of selection bias.Let's say you're interested in the effect of Catholic schools.One way to estimate the effect isto compare the test score of kids who go to Catholic schoolsto the test score of kids who go to public schools.The problem is that the kids who go to Catholic schools

    • 00:45

      RYAN YEUNG [continued]: are different from the kids who go to public schools.They are selected into the Catholic schools.These differences can explain any differencesin achievement between two groups.That's selection bias.Some of these differences, though, are constant over time.They're fixed.Perhaps the Catholic school kids comefrom families that place a high value on education.

    • 01:08

      RYAN YEUNG [continued]: If that variable is fixed over time, then it's a fixed effect.By controlling for a dummy variable for each kid,we can control for these fixed effectsand improve our ability to estimate causal effects.

Fixed Effects Models

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Abstract

Professor Ryan Yeung explains fixed effect models as a way to correct for bias in a research study.

Fixed Effects Models

Professor Ryan Yeung explains fixed effect models as a way to correct for bias in a research study.

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