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Inference on a Generalized Roy Model, with an Application to Schooling Decisions in France

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Author Info

  • d'Haultfoeuille, Xavier

    ()
    (CREST-INSEE)

  • Maurel, Arnaud

    ()
    (Duke University)

Abstract

This paper considers the identification and estimation of an extension of Roy's model (1951) of occupational choice, which includes a non-pecuniary component in the decision equation and allows for uncertainty on the potential outcomes. This framework is well suited to various economic contexts, including educational and sectoral choices, or migration decisions. We focus in particular on the identification of the non-pecuniary component under the condition that at least one variable affects the selection probability only through potential earnings, that is under the opposite of the usual exclusion restrictions used to identify switching regressions models and treatment effects. Point identification is achieved if such variables are continuous, while bounds are obtained otherwise. As a result, the distribution of the ex ante treatment effects can be point or set identified without any usual instruments. We propose a three-stages semiparametric estimation procedure for this model, which yields root-n consistent and asymptotically normal estimators. We apply our results to the educational context, by providing new evidence from French data that non-pecuniary factors are a key determinant of higher education attendance decisions.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 4606.

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Length: 51 pages
Date of creation: Dec 2009
Date of revision:
Publication status: published in: Journal of Econometrics, 2013, 174 (2), 95–106
Handle: RePEc:iza:izadps:dp4606

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Related research

Keywords: schooling choices; ex ante returns to schooling; exclusion restrictions; Roy model; nonparametric identification;

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References

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  1. Whitney K. Newey, 2009. "Two-step series estimation of sample selection models," Econometrics Journal, Royal Economic Society, vol. 12(s1), pages S217-S229, 01.
  2. d'Haultfoeuille, Xavier & Maurel, Arnaud, 2009. "Another Look at the Identification at Infinity of Sample Selection Models," IZA Discussion Papers 4334, Institute for the Study of Labor (IZA).
  3. Rafael Lalive & Alejandra Cattaneo, 2006. "Social Interactions and Schooling Decisions," IEW - Working Papers 298, Institute for Empirical Research in Economics - University of Zurich.
  4. Xavier d'Haultfoeuille, 2008. "A New Instrumental Method for Dealing with Endogenous Selection," Working Papers 2008-23, Centre de Recherche en Economie et Statistique.
  5. Dolton, P J & Makepeace, G H & Van Der Klaauw, W, 1989. "Occupational Choice and Earnings Determination: The Role of Sample Selection and Non-pecuniary Factors," Oxford Economic Papers, Oxford University Press, vol. 41(3), pages 573-94, July.
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  22. Cunha, Flavio & Heckman, James J., 2007. "Identifying and Estimating the Distributions of Ex Post and Ex Ante Returns to Schooling," Labour Economics, Elsevier, vol. 14(6), pages 870-893, December.
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Cited by:
  1. Helmut Rainer & Ian Smith, 2012. "Education, Communication and Wellbeing: An Application to Sexual Satisfaction," Kyklos, Wiley Blackwell, vol. 65(4), pages 581-598, November.

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