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Binary choice model with interactive effects

Author

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  • Xue, Sen
  • Yang, Thomas Tao
  • Zhou, Qiankun

Abstract

This paper considers the estimation of binary choice model with interactive effects. We propose an estimator via combining the projection method (Mundlak, 1978) and the special regressor method (Lewbel, 2000a). The proposed estimator requires mild distribution assumptions on unobservables. The asymptotic property of this estimator is established. Our estimator performs well in Monte Carlo simulations. We apply this estimator to study migration intention of rural residents in China. The results suggest that numbers of co-habiting children and elderly are negatively correlated with migration intention.

Suggested Citation

  • Xue, Sen & Yang, Thomas Tao & Zhou, Qiankun, 2018. "Binary choice model with interactive effects," Economic Modelling, Elsevier, vol. 70(C), pages 338-350.
  • Handle: RePEc:eee:ecmode:v:70:y:2018:i:c:p:338-350
    DOI: 10.1016/j.econmod.2017.08.002
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    References listed on IDEAS

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    1. Yingying Dong & Arthur Lewbel & Thomas Tao Yang, 2012. "Comparing Features of Convenient Estimators for Binary Choice Models With Endogenous Regressors," Boston College Working Papers in Economics 789, Boston College Department of Economics, revised 15 May 2012.
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    More about this item

    Keywords

    Binary choice model; Interactive effects; Projection method; Partition regression; Special regressor;

    JEL classification:

    • C01 - Mathematical and Quantitative Methods - - General - - - Econometrics
    • C35 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions
    • C38 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Classification Methdos; Cluster Analysis; Principal Components; Factor Analysis

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