Binary Choice with Binary Endogenous Regressors in Panel Data: Estimating the Effect of Fertility on Female Labour Participation
AbstractThis paper considers the estimation of binary choice panel data models with discrete endogenous regressors. We present a switching probit model which accounts for selectivity bias as well as for other forms of time invariant unobserved heterogeneity. Individual effects are allowed to be correlated with the explanatory variables, which can be predetermined as opposed to strictly exogenous. This model is applied to estimate a female participation equation with endogenous fertility and predetermined existing children and with individual effects using PSID data. We use the family sex composition as an instrument for exogenous fertility movements. The results indicate that assuming the exogeneity of fertility induces a downward bias in absolute value in the estimated negative effect of fertility on participation, although the failure to account for unobserved heterogeneity exaggerates this effect. Moreover, the estimates that deal with the endogeneity of fertility and control for fixed effects, but treat existing children as strictly exogenous produce a smaller effect of fertility that those obtained treating this variable as predetermined.
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Bibliographic InfoPaper provided by Centro de Estudios Monetarios Y Financieros- in its series Papers with number 9805.
Length: 53 pages
Date of creation: 1998
Date of revision:
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Postal: Centro de Estudios Monetarios Y Financieros. Casado del Alisal, 5-28014 Madrid, Spain.
Web page: http://www.cemfi.es/
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FERTILITY ; FEMALES ; ECONOMETRIC MODELS;
Other versions of this item:
- Carrasco, Raquel, 2001. "Binary Choice with Binary Endogenous Regressors in Panel Data: Estimating the Effect of Fertility on Female Labor Participation," Journal of Business & Economic Statistics, American Statistical Association, vol. 19(4), pages 385-94, October.
- Raquel Carrasco, 1999. "Binary Choice with Binary Endogenous Regressors in Panel Data: Estimating the Effect of Fertility on Female Labour Participation," Working Papers 1999.3, Fondazione Eni Enrico Mattei.
- J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth
- J2 - Labor and Demographic Economics - - Demand and Supply of Labor
- C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Longitudinal Data; Spatial Time Series
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