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Two-part models are robust to endogenous selection

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  • Drukker, David M.

Abstract

This note shows that the two-part model (TPM) can be used to estimate conditional and population-averaged effects of exogenous covariates when there is endogenous selection between the two parts. Much like estimating an average treatment effect on the treated, the TPM estimator only needs estimates of parameters that are recoverable from the observable data to estimate covariate effects. The TPM estimator is consistent for the counter factual of interest when selection between the parts is endogenous because the unobservable parameter is multiplied by zero.

Suggested Citation

  • Drukker, David M., 2017. "Two-part models are robust to endogenous selection," Economics Letters, Elsevier, vol. 152(C), pages 71-72.
    • Handle: RePEc:eee:ecolet:v:152:y:2017:i:c:p:71-72
    DOI: 10.1016/j.econlet.2017.01.004
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    References listed on IDEAS

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    1. Manning, W. G. & Duan, N. & Rogers, W. H., 1987. "Monte Carlo evidence on the choice between sample selection and two-part models," Journal of Econometrics, Elsevier, vol. 35(1), pages 59-82, May.
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    4. Leung, Siu Fai & Yu, Shihti, 1996. "On the choice between sample selection and two-part models," Journal of Econometrics, Elsevier, vol. 72(1-2), pages 197-229.
    5. Duan, Naihua, et al, 1984. "Choosing between the Sample-Selection Model and the Multi-part Model," Journal of Business & Economic Statistics, American Statistical Association, vol. 2(3), pages 283-289, July.
    6. Hay, Joel W & Olsen, Randall J, 1984. "Let Them Eat Cake: A Note on Comparing Alternative Models of the Demand for Medical Care," Journal of Business & Economic Statistics, American Statistical Association, vol. 2(3), pages 279-282, July.
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    Cited by:

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    5. Goerke, Laszlo & Pannenberg, Markus, 2023. "Minimum Wage Non-compliance: The Role of Co-determination," IZA Discussion Papers 16621, Institute of Labor Economics (IZA).
    6. Bell, David N.F. & Hart, Robert A., 2019. "The Decline of Overtime Working in Britain," IZA Discussion Papers 12651, Institute of Labor Economics (IZA).
    7. Cefis, Elena & Bartoloni, Eleonora & Bonati, Marco, 2020. "Show me how to live: Firms' financial conditions and innovation during the crisis," Structural Change and Economic Dynamics, Elsevier, vol. 52(C), pages 63-81.
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    11. David N. F. Bell & Robert A. Hart, 2023. "The decline of paid overtime working in Britain," British Journal of Industrial Relations, London School of Economics, vol. 61(2), pages 235-258, June.

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    More about this item

    Keywords

    Two-part model; Endogeneity; Counter-factual inference endogenous treatment effect;
    All these keywords.

    JEL classification:

    • C1 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General
    • C4 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics

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