Dear friends in the Stata forum,

I am working with a (strongly balanced) panel data using DiD analysis for my research. I have two control variables for the firm size which are total assets (in $thousands) and the number of employees. However, I am not so sure which control variable is the best one to use. Is there any test in Stata to check this?

Also, when I conducted the Hausman test using the natural logarithm of the number of employees, the test result suggested me to use the fixed model effects --> desirable result. But the Hausman test implied the model was random when I used total assets. Does that mean the natural logarithm of the number of employees, in this case, is a good control variable to use?

Many thanks!

Here is my code:
generate y=ln(1+NoPatents)
generate x1=ln(1+RDE)
generate x2=ln(NoEmployees)

xtset, clear
xtset id1 year

xtreg y x1 x2, fe
estimates store fixed
xtreg y x1 x2, re
estimates store random
hausman fixed random