This question is cross posted here: https://stats.stackexchange.com/ques...riable-and-a-t


The question is methodological but also computational. First of all, I want to understand the interpretation between an interaction term of an individual and a time dummy within a fixed effect analysis. In particular, the regression I have is the following:

Code:
 xtreg Y X i.date  1.D#1.C, fe vce(robust)
where both Y and X vary over time and individuals, date corresponds to time dummies to control for time fixed effects and the last interaction term comprises C, a individual dummy that classifies groups; and D a time dummy equalling 1 from an specific time event ( a shock) on.

To bring more intuition, lets call Y=log(wage) and D=1 if male. I am interpreting the coefficient of the interaction term (times 100) as the percentage increase in the wage gap across sex after the time shock occurred.

Is this interpretation correct? How can I be sure that stata is setting the base categories properly?


PS: You can also see in the link at stackexchange how I tried to formally prove this interpretation.