Feenstra and Hanson [NBER Working Paper No. 6052 (1997)] propose a procedure to correct the standard errors in a two-stage regression with generated dependent variables. Their method has subsequently been used in two-stage mandated wage models [Feenstra and Hanson, "Quarterly Journal of Economics" (1999) Vol. 114, pp. 907-940; Haskel and Slaughter, "The Economic Journal" (2001) Vol. 111, pp. 163-187; "Review of International Economics" (2003) Vol. 11, pp. 630-650] and for the estimation of the sector bias of skill-biased technological change [Haskel and Slaughter, "European Economic Review" (2002) Vol. 46, pp. 1757-1783]. Unfortunately, the proposed correction is negatively biased (sometimes even resulting in negative estimated variances) and therefore leads to overestimation of the inferred significance. We present an unbiased correction procedure and apply it to the models reported by Feenstra and Hanson (1999)and Haskel and Slaughter (2002). Copyright 2005 Blackwell Publishing Ltd.
Download Info
To download:
If you experience problems downloading a file, check if you have the
proper application to
view it first. Information about this may be contained
in the File-Format links below. In case of further problems read
the IDEAS help
page. Note that these files are not on the IDEAS
site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
Cited by: (explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)