In Figure 17-5, I illustrate how you estimate an RE model in STATA using data on a sample of workers from the 1997 National Longitudinal Survey of Youth (NLSY). Specifically, I’m focusing on those individuals who were between 18 and 25 years of age at the time of the first interview. To make sure I can use the STATA panel econometrics tools, I first use the “xtset” command to declare
the data as panel and tag the variables that identify cross-sectional units and time periods.