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A Switching Frontier Model for Imperfect Sample Separation Information: With an Application to Constrained Labor Supply

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  • Douglas, Stratford M
  • Conway, Karen Smith
  • Ferrier, Gary D

Abstract

This paper combines frontier functions and switching regressions. This allows economic agents to operate under different efficiency 'regimes,' thus relaxing the assumption that all observations are drawn from the same distribution of inefficiency. The 'switch' is based on sample separation information that is treated first as perfect, then as imperfect (or noisy). Available sample separation information suggests an observation's regime, however the information may not be accurate. By comparing results across alternative specifications of sample separation information as perfect and noisy, this approach provides evidence on the quality of the sample separation information. The technique's usefulness is demonstrated via an application to constrained labor supply. Copyright 1995 by Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.

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Bibliographic Info

Article provided by Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association in its journal International Economic Review.

Volume (Year): 36 (1995)
Issue (Month): 2 (May)
Pages: 503-29

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Handle: RePEc:ier:iecrev:v:36:y:1995:i:2:p:503-29

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Cited by:
  1. Sullivan, Paul, 2006. "Estimation of an Occupational Choice Model when Occupations are Misclassified," MPRA Paper 862, University Library of Munich, Germany.
  2. Rob Euwals & Bertrand Melenberg & Arthur van Soest, 1998. "Testing the predictive value of subjective labour supply data," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 13(5), pages 567-585.
  3. Sarah Brown & J. Sessions & Duncan Watson, 2007. "The contribution of hour constraints to working poverty in Britain," Journal of Population Economics, Springer, vol. 20(2), pages 445-463, April.
  4. Tomas Lichard & Jan Hanousek & Randall K. Filer, 2013. "Measuring the Shadow Economy: Endogenous Switching Regression with Unobserved Separation," CERGE-EI Working Papers wp494, The Center for Economic Research and Graduate Education - Economic Institute, Prague.
  5. Euwals, R.W., 1997. "Empirical Studies on Individual Labour Market Behaviour," Open Access publications from Tilburg University urn:nbn:nl:ui:12-73881, Tilburg University.
  6. Smith Conway, Karen & Kimmel, Jean, 1998. "Male labor supply estimates and the decision to moonlight," Labour Economics, Elsevier, vol. 5(2), pages 135-166, June.
  7. René Böheim & Mark P. Taylor, 2004. "Actual and Preferred Working Hours," British Journal of Industrial Relations, London School of Economics, vol. 42(1), pages 149-166, 03.
  8. Karen Smith Conway & Jean Kimmel, 1992. "Moonlighting Behavior: Theory and Evidence," Upjohn Working Papers and Journal Articles 92-09, W.E. Upjohn Institute for Employment Research.

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