Hello,
I am sorry if this topic has come up before - however, I did searched for an answer and failed. My question is very straight forward:
If I am using fixed effects model is it okey to include individual-invariant, but time-variant variables?
I am estimating the following model:
Code:
xtreg y x1 x2 x3, fe vce(cluster clustervar)
where y is employment of certain group, x1 is % of people in that group that use computer, and I would like to include price of computer capital as x2 (which is time-variant, but individual-invariant).
If it is okey to do so, should I worry about potential multicollinearity?

Thank you.