A recent discussion on the StataList (here) identifies something of an anomaly when it comes to how "vce()" operates for the xtreg,fe command versus other commands.
As the unfolding discussion notes, when using the xtreg,fe command, vce(cluster var) and vce(robust) operate similarly. With other commands, by contrast, they generally operate differently. The difference emerges because where vce(robust) requires that observations are independent in order for it to be valid, vce(cluster var), by contrast, accommodates and adjusts for correlation of observations within values of groupvar (or "cluster var").
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