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A Switching Frontier Model for Imperfect Sample Separation Information: With an Application to Constrained Labor Supply

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  • Douglas, Stratford M
  • Conway, Karen Smith
  • Ferrier, Gary D

Abstract

This paper combines frontier functions and switching regressions. This allows economic agents to operate under different efficiency 'regimes,' thus relaxing the assumption that all observations are drawn from the same distribution of inefficiency. The 'switch' is based on sample separation information that is treated first as perfect, then as imperfect (or noisy). Available sample separation information suggests an observation's regime, however the information may not be accurate. By comparing results across alternative specifications of sample separation information as perfect and noisy, this approach provides evidence on the quality of the sample separation information. The technique's usefulness is demonstrated via an application to constrained labor supply. Copyright 1995 by Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.

Suggested Citation

  • Douglas, Stratford M & Conway, Karen Smith & Ferrier, Gary D, 1995. "A Switching Frontier Model for Imperfect Sample Separation Information: With an Application to Constrained Labor Supply," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 36(2), pages 503-529, May.
    • Handle: RePEc:ier:iecrev:v:36:y:1995:i:2:p:503-29
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    Cited by:

    1. Dustmann, C. & van Soest, A.H.O., 1999. "Parametric and Semiparametric Estimation in Models with Misclassified Categorical Dependent Variables," Discussion Paper 1999-51, Tilburg University, Center for Economic Research.
    2. Paul Sullivan, 2009. "Estimation of an Occupational Choice Model when Occupations are Misclassified," Journal of Human Resources, University of Wisconsin Press, vol. 44(2).
    3. Tomas Lichard & Jan Hanousek & Randall K. Filer, 2012. "Measuring the Shadow Economy: Endogenous Switching Regression with Unobserved Separation," Economics Working Paper Archive at Hunter College 438, Hunter College Department of Economics.
    4. René Böheim & Mark P. Taylor, 2004. "Actual and Preferred Working Hours," British Journal of Industrial Relations, London School of Economics, vol. 42(1), pages 149-166, March.
    5. Christian Dustmann & Arthur van Soest, 2001. "Language Fluency And Earnings: Estimation With Misclassified Language Indicators," The Review of Economics and Statistics, MIT Press, vol. 83(4), pages 663-674, November.
    6. Alfonso Flores-Lagunes & Audrey Light, "undated". "Interpreting Sheepskin Effects in the Returns to Education," Working Papers 22, Princeton University, School of Public and International Affairs, Education Research Section..
    7. Euwals, R.W., 1997. "Empirical studies on individual labour market behaviour," Other publications TiSEM 0ccdaeec-7067-453e-a450-b, Tilburg University, School of Economics and Management.
    8. Dustmann C. & Van Soest A., 2004. "An Analysis of Speaking Fluency of Immigrants Using Ordered Response Models With Classification Errors," Journal of Business & Economic Statistics, American Statistical Association, vol. 22, pages 312-321, July.
    9. Tomáš Lichard & Jan Hanousek & Randall K. Filer, 2021. "Hidden in plain sight: using household data to measure the shadow economy," Empirical Economics, Springer, vol. 60(3), pages 1449-1476, March.
    10. Rob Euwals & Bertrand Melenberg & Arthur van Soest, 1998. "Testing the predictive value of subjective labour supply data," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 13(5), pages 567-585.
    11. Smith Conway, Karen & Kimmel, Jean, 1998. "Male labor supply estimates and the decision to moonlight," Labour Economics, Elsevier, vol. 5(2), pages 135-166, June.
    12. Sarah Brown & J. Sessions & Duncan Watson, 2007. "The contribution of hour constraints to working poverty in Britain," Journal of Population Economics, Springer;European Society for Population Economics, vol. 20(2), pages 445-463, April.
    13. Karen Smith Conway & Jean Kimmel, 1992. "Moonlighting Behavior: Theory and Evidence," Upjohn Working Papers 92-09, W.E. Upjohn Institute for Employment Research.

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