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Consequences of Specification Error for Distributional Analysis With an Application to Intergenerational Mobility

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  • D. O’NEILL
  • O. SWEETMAN
  • D. VAN DE GAER

Abstract

We analyze the consequences of three types of specification error for conditional distribution functions F (y|a): measurement error in y, measurement error in a and omitted conditioning variables. The paper uses exact results to obtain conditions under which the effect of the misspecification on the computed distribution function can be signed. The effects are shown to depend on both the curvature of the true distribution and the properties of the error distribution. The consequences of misspecification are illustrated using a model of intergenerational mobility.

Suggested Citation

  • D. O’Neill & O. Sweetman & D. Van De Gaer, 2002. "Consequences of Specification Error for Distributional Analysis With an Application to Intergenerational Mobility," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 02/156, Ghent University, Faculty of Economics and Business Administration.
    • Handle: RePEc:rug:rugwps:02/156
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    References listed on IDEAS

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    Cited by:

    1. D. Van den Poel, 2003. "Predicting Mail-Order Repeat Buying. Which Variables Matter?," Review of Business and Economic Literature, KU Leuven, Faculty of Economics and Business (FEB), Review of Business and Economic Literature, vol. 0(3), pages 371-404.

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    More about this item

    Keywords

    specification error; mobility; conditional distributions;
    All these keywords.

    JEL classification:

    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General

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