Hi Niam, Thanks for your question. You seem to have two distinct wants for your model. The first, and your primary research question seems to be whether funding influences publications. If that is the case, then your FE estimate with the university type dropped is effectively controlling for the university type and all other idiosyncratic confounding effects specific to the professor. So your estimates, assuming the modeling specified correctly, should be consistent. If you are interested in the marginal effect of type and you want to still control for some idiosyncratic professor effect, you will need to relax some of the assumptions on the way that university type interacts with professor specific effects. If willing to do this, you can employ another estimator known as a Hausman-Taylor estimator. Currently we do not have super convenient access to this estimator in ETS (but look for it soon ). In the meantime, if you look at this document, page 210 http://eco.cueb.edu.cn/upload/2012/9/616432590.pdf then you will see how to estimate this in SAS. It is a multistep process. You can also find IML code here. Copyright C 2012 by R. Carter Hill and Randall C. Campbell "Using SAS for Econometrics" by R. Carter Hill and Randall C. Campbell (2012) John Wiley and Sons, Inc Chapter 15 Again, the key assumption for this model to make sense is that there is no correlation between the individual professor characteristics and the university type (which seems a little implausible to me though this is your call) Best of luck-Ken
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