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Correcting for Survival Effects in Cross Section Wage Equations Using NBA Data

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Author Info
Peter A. Groothuis
James Richard Hill

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Abstract

Cross sectional employment data is not random. Individuals who survive to a longer level of tenure tend to have a higher level of productivity than those who exit earlier. This result suggests that in cross sectional data high productivity workers are over-sampled at high levels of tenure. In wage equations using cross sectional data, results could be biased from the over sampling of high productive workers at long levels of tenure. This survival effect in cross sectional data could possibly bias the coefficient on tenure upwards. We explore techniques to correct for survival bias using a panel study of National Basketball Association players. In particular we focus on a modified Heckman selectivity bias procedure using duration models to correct for survival bias. Key Words:

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File URL: http://econ.appstate.edu/RePEc/pdf/wp0919.pdf
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Paper provided by Department of Economics, Appalachian State University in its series Working Papers with number 09-19.

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Date of creation: 2009
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Handle: RePEc:apl:wpaper:09-19

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  1. Heckman, James J, 1979. "Sample Selection Bias as a Specification Error," Econometrica, Econometric Society, vol. 47(1), pages 153-61, January. [Downloadable!] (restricted)
  2. Katharine G. Abraham & Henry S. Farber, 1987. "Job Duration, Seniority, and Earnings," NBER Working Papers 1819, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  3. Gary S. Becker, 1962. "Investment in Human Capital: A Theoretical Analysis," Journal of Political Economy, University of Chicago Press, vol. 70, pages 9. [Downloadable!] (restricted)
  4. Lazear, Edward P, 1979. "Why Is There Mandatory Retirement?," Journal of Political Economy, University of Chicago Press, vol. 87(6), pages 1261-84, December. [Downloadable!] (restricted)
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