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Combining information from Heckman and matching estimators: testing and controlling for hidden bias

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  • Gerry H. Makepeace

    ()
    (Cardiff Business School, Cardiff University and IZA, Bonn)

  • Michael J. Peel

    ()
    (Cardiff Business School, Cardiff University)

Abstract

We demonstrate how the Heckman methodology can be applied to the Rosenbaum sensitivity model and the Rubin matched difference estimator. We develop a statistical test of the conditional independence assumption (CIA), based on Heckit for matched pairs. If the CIA is rejected, the method facilitates the estimation of matched treatment effects adjusted for hidden bias. We illustrate this methodology empirically for the full-time/part-time pay gap for British women. The proposed method has clear utility in establishing whether propensity score matched treatment estimates are prone to unobserved selection bias and for controlling for such bias

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File URL: http://www.accessecon.com/Pubs/EB/2013/Volume33/EB-13-V33-I3-P227.pdf
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Bibliographic Info

Article provided by AccessEcon in its journal Economics Bulletin.

Volume (Year): 33 (2013)
Issue (Month): 3 ()
Pages: 2422-2436

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Handle: RePEc:ebl:ecbull:eb-13-00321

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Keywords: matching; Rosenbaum bounds; Heckit; unobserved bias; women's part-time pay penalty;

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References

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  1. Sascha O. Becker & Marco Caliendo, 2007. "Sensitivity analysis for average treatment effects," Stata Journal, StataCorp LP, vol. 7(1), pages 71-83, February.
  2. Rosenbaum, Paul R., 2005. "Heterogeneity and Causality: Unit Heterogeneity and Design Sensitivity in Observational Studies," The American Statistician, American Statistical Association, vol. 59, pages 147-152, May.
  3. Martin Huber, 2009. "Treatment evaluation in the presence of sample selection," University of St. Gallen Department of Economics working paper series 2009 2009-07, Department of Economics, University of St. Gallen.
  4. Manning, Alan & Petrongolo, Barbara, 2006. "The Part-Time Pay Penalty for Women in Britain," IZA Discussion Papers 2419, Institute for the Study of Labor (IZA).
  5. Richard Blundell & Howard Reed & Thomas M. Stoker, 2003. "Interpreting Aggregate Wage Growth: The Role of Labor Market Participation," American Economic Review, American Economic Association, vol. 93(4), pages 1114-1131, September.
  6. Puhani, Patrick A, 2000. " The Heckman Correction for Sample Selection and Its Critique," Journal of Economic Surveys, Wiley Blackwell, vol. 14(1), pages 53-68, February.
  7. Ryan Pike, 2011. "Patterns of pay: Results of the Annual Survey of Hours and Earnings 1997 to 2010," Economic and Labour Market Review, Palgrave Macmillan, vol. 5(3), pages 14-40, March.
  8. Eric S. Lin & Yu-lung Lue, 2010. "The Causal Effect of the Cram Schooling Timing Decision on Math Scores," Economics Bulletin, AccessEcon, vol. 30(3), pages 2330-2345.
  9. DiPrete, Thomas A. & Gangl, Markus, 2004. "Assessing bias in the estimation of causal effects: Rosenbaum bounds on matching estimators and instrumental variables estimation with imperfect instruments," Discussion Papers, Research Unit: Labor Market Policy and Employment SP I 2004-101, Social Science Research Center Berlin (WZB).
  10. Heckman, James J & Sedlacek, Guilherme, 1985. "Heterogeneity, Aggregation, and Market Wage Functions: An Empirical Model of Self-selection in the Labor Market," Journal of Political Economy, University of Chicago Press, vol. 93(6), pages 1077-1125, December.
  11. Karen Mumford & Peter N. Smith, 2009. "What determines the part-time and gender earnings gaps in Britain: evidence from the workplace," Oxford Economic Papers, Oxford University Press, vol. 61(suppl_1), pages i56-i75, April.
  12. Black, Dan A. & Smith, J.A.Jeffrey A., 2004. "How robust is the evidence on the effects of college quality? Evidence from matching," Journal of Econometrics, Elsevier, vol. 121(1-2), pages 99-124.
  13. repec:att:wimass:9001 is not listed on IDEAS
  14. Oostendorp, Remco, 2004. "Globalization and the gender wage gap," Policy Research Working Paper Series 3256, The World Bank.
  15. Klein, Roger & Vella, Francis, 2006. "A Semiparametric Model for Binary Response and Continuous Outcomes Under Index Heteroscedasticity," IZA Discussion Papers 2383, Institute for the Study of Labor (IZA).
  16. Nawata, Kazumitsu, 1993. "A note on the estimation of models with sample-selection biases," Economics Letters, Elsevier, vol. 42(1), pages 15-24.
  17. John Gibson, 2009. "The public sector pay premium, compensating differentials and unions: propensity score matching evidence from Australia, Canada, Great Britain and the United States," Economics Bulletin, AccessEcon, vol. 29(3), pages 2325-2332.
  18. Newey, Whitney K & Powell, James L & Walker, James R, 1990. "Semiparametric Estimation of Selection Models: Some Empirical Results," American Economic Review, American Economic Association, vol. 80(2), pages 324-28, May.
  19. Sara Connolly & Mary Gregory, 2009. "The part-time pay penalty: earnings trajectories of British Women," Oxford Economic Papers, Oxford University Press, vol. 61(suppl_1), pages i76-i97, April.
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