I don't understand what the time variable does in -xtset panel time-. I first thought that it incorporated time fixed effects into models using -xtreg, fe-, but it appears it does not. So what is it for? Here is an example
Code:
xtset, clear
xtset idcode

/* Here's a model with fixed effects for individual and year */
xtreg ln_w tenure age i.year, fe cluster(idcode)
/* That's fine, but we have a coefficient for each year, which we don't really need to see. */
/* Is it possible to incorporate the year fixed effects implicitly, like this? */
xtset, clear
xtset idcode year
xtreg ln_w tenure age, fe cluster(idcode)
/* Nope, these estimates are different than the previous set. They must not include year fixed effects. */
/* Here's the model with year fixed effects again. */
xtreg ln_w tenure age i.year, fe cluster(idcode)
So what difference to the estimates did -xtset idcode year- make? Is it possible it would make a bigger difference if the rows were not ordered by year within idcode?

Thanks for any clarification!
Paul