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A Control Function Approach to Estimating Dynamic Probit Models with Endogenous Regressors, with an Application to the Study of Poverty Persistence in China

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  • Giles, John T.

    (World Bank)

  • Murtazashvili, Irina

    (Drexel University)

Abstract

This paper proposes a parametric approach to estimating a dynamic binary response panel data model that allows for endogenous contemporaneous regressors. Such a model is of particular value for settings in which one wants to estimate the effects of an endogenous treatment on a binary outcome. In order to demonstrate the usefulness of the approach, we use it to examine the impact of rural-urban migration on the likelihood that households in rural China fall below the poverty line. In this application, it is shown that migration is important for reducing the likelihood that poor households remain in poverty and that non-poor households fall into poverty. Furthermore, it is demonstrated that failure to control for unobserved heterogeneity would lead the researcher to underestimate the impact of migrant labor markets on reducing the probability of falling into poverty.

Suggested Citation

  • Giles, John T. & Murtazashvili, Irina, 2012. "A Control Function Approach to Estimating Dynamic Probit Models with Endogenous Regressors, with an Application to the Study of Poverty Persistence in China," IZA Discussion Papers 6887, Institute of Labor Economics (IZA).
  • Handle: RePEc:iza:izadps:dp6887
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    References listed on IDEAS

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    Cited by:

    1. Alem, Yonas, 2013. "Poverty Persistence and Intra-Household Heterogeneity in Occupations: Evidence from Urban Ethiopia," Working Papers in Economics 580, University of Gothenburg, Department of Economics.
    2. Ming Liu & Sumner la Croix, 2013. "A Cross-Country Index of Intellectual Property Rights in Pharmaceutical Innovations," Working Papers 201313, University of Hawaii at Manoa, Department of Economics.
    3. Kevin Momanyi, 2018. "A Structural Model of The Demand For Telecare," 2018 Papers pmo1170, Job Market Papers.
    4. Zhe Chen & Apurbo Sarkar & Md. Shakhawat Hossain & Xiaojing Li & Xianli Xia, 2021. "Household Labour Migration and Farmers’ Access to Productive Agricultural Services: A Case Study from Chinese Provinces," Agriculture, MDPI, vol. 11(10), pages 1-20, October.
    5. Ming Liu & Sumner LaCroix, 2011. "The Impact of Stronger Property Rights in Pharmaceuticals on Innovation in Developed and Developing Countries," Working Papers 201116, University of Hawaii at Manoa, Department of Economics.
    6. Moscone, F. & Tosetti, E. & Vittadini, G., 2016. "The impact of precarious employment on mental health: The case of Italy," Social Science & Medicine, Elsevier, vol. 158(C), pages 86-95.
    7. Alem, Yonas, 2014. "Poverty Persistence and Intra-Household Heterogeneity in Occupations: Some Evidence from Ethiopia," RFF Working Paper Series dp-14-05-efd, Resources for the Future.
    8. Yonas Alem, 2015. "Poverty Persistence and Intra-Household Heterogeneity in Occupations: Evidence from Urban Ethiopia," Oxford Development Studies, Taylor & Francis Journals, vol. 43(1), pages 20-43, March.
    9. Yan Wei & Li Zhang, 2016. "Understanding Hypergamous Marriages of Chinese Rural Women," Population Research and Policy Review, Springer;Southern Demographic Association (SDA), vol. 35(6), pages 877-898, December.

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    More about this item

    Keywords

    control function approach; migration; dynamic binary response models; rural China; poverty-persistence;
    All these keywords.

    JEL classification:

    • C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Estimation: General
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • P25 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - Urban, Rural, and Regional Economics

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