  We study kmeans clustering estimation of panel data models with a latent
group structure and $N$ units and $T$ time periods under long panel
asymptotics. We show that the group-specific coefficients can be estimated at
the parametric root $NT$ rate even if error variances diverge as $T \to \infty$
and some units are asymptotically misclassified. This limit case approximates
empirically relevant settings and is not covered by existing asymptotic
results.
