Self-Selection and Subjective Well-Being: Copula Models with an Application to Public and Private Sector Work
AbstractWe discuss a new approach to specifying and estimating ordered probit models with endogenous switching, or with binary endogenous regressor, based on copula functions. These models provide a framework of analysis for self-selection in economic well-being equations, where assigment of regressors may be choice based, resulting from well-being maximization, rather than random. In an application to public and private sector job satisfaction, and using data on male workers from the German Socio-Economic Panel, we find that a model based on Frank's copula is preferred over two alternative models with independence and normal copula, respectively. The results suggest that public sector workers are negatively selected.
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Bibliographic InfoPaper provided by DIW Berlin, The German Socio-Economic Panel (SOEP) in its series SOEPpapers on Multidisciplinary Panel Data Research with number 135.
Length: 21 p.
Date of creation: 2008
Date of revision:
Ordered probit; switching regression; Frank copula; job satisfaction; German Socio-Economic Panel;
Find related papers by JEL classification:
- I31 - Health, Education, and Welfare - - Welfare and Poverty - - - General Welfare
- C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Longitudinal Data; Spatial Time Series
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-11-04 (All new papers)
- NEP-DCM-2008-11-04 (Discrete Choice Models)
- NEP-ECM-2008-11-04 (Econometrics)
- NEP-HAP-2008-11-04 (Economics of Happiness)
- NEP-LAB-2008-11-04 (Labour Economics)
- NEP-LTV-2008-11-04 (Unemployment, Inequality & Poverty)
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