AbstractWe consider linear predictor definitions of noncausality or strict exogeneity and show that it is restrictive to assert that there exists a time-invariant latent variable c such that x is strictly exogenous conditional on c. A restriction of this sort is necessary to justify standard techniques for controlling for unobserved individual effects. There is a parallel analysis for multivariate probit models, but now the distributional assumption for the individual effects is restrictive. This restriction can be avoided by using a conditional likelihood analysis in a logit model. Some of these ideas are illustrated by estimating union wage effects for a sample of Young Men in the National Longitudinal Survey. The results indicate that the lags and leads could have been generated just by an unobserved individual effect, which gives some support for analysis of covariance-type estimates. These estimates indicate a substantial omitted variable bias. We also present estimates of a model of female labor force participation, focusing on the relationship between participation and fertility. Unlike the wage example, there is evidence against conditional strict exogeneity; if we ignore this evidence, the probit and logit approaches give conflicting results.
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Bibliographic InfoPaper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 0913.
Date of creation: Jun 1982
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- Card, David, 1996. "The Effect of Unions on the Structure of Wages: A Longitudinal Analysis," Econometrica, Econometric Society, vol. 64(4), pages 957-79, July.
- Orley Ashenfelter & David Card, 1984.
"Using the Longitudinal Structure of Earnings to Estimate the Effect of Training Programs,"
NBER Working Papers
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- Ashenfelter, Orley & Card, David, 1985. "Using the Longitudinal Structure of Earnings to Estimate the Effect of Training Programs," The Review of Economics and Statistics, MIT Press, vol. 67(4), pages 648-60, November.
- Orley Ashenfelter & David Card, 1984. "Using the Longitudinal Structure of Earnings to Estimate the Effect of Training Programs," Working Papers 554, Princeton University, Department of Economics, Industrial Relations Section..
- Jerry A. Hausman & Bart D. Ostro & David A. Wise, 1984. "Air Pollution and Lost Work," NBER Working Papers 1263, National Bureau of Economic Research, Inc.
- Anna Giraldo & Enrico Rettore & Ugo Trivellato, 2002. "The persistence of poverty: true state dependence or unobserved heterogeneity? Some evidence from the Italian Survey on Household Income and Wealth," 10th International Conference on Panel Data, Berlin, July 5-6, 2002 B2-1, International Conferences on Panel Data.
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