Selection Correction in Panel Data Models: An Application to Labour Supply and Wages
AbstractIn recent years a number of panel estimators have been suggested for sample selection models, where both the selection equation and the equation of interest contain individual effects which are correlated with the explanatory variables. We review and compare some of these estimators, and apply them to estimating the return to actual labour market experience for females, using a panel of twelve years. All these estimators rely on the assumption of strict exogeneity of regressors in the equation of interest, conditional on individual specific effects and the selection mechanism. This assumption is likely to be violated in many applications. Also, life history variables are often measured with error in survey data sets, because they contain a retrospective component. We show how non-strict exogeneity and measurement error can be taken into account within the estimation methods discussed.
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Bibliographic InfoPaper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 162.
Length: 59 pages
Date of creation: Jun 2000
Date of revision:
Publication status: published as 'Selection correction in panel data models: An application to the estimation of females' wage equations' in: Econometrics Journal, 2007, 10 (2), 263 - 293
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Find related papers by JEL classification:
- C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Longitudinal Data; Spatial Time Series
- C34 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Truncated and Censored Models; Switching Regression Models
- J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
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