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The wages of BMI: Bayesian analysis of a skewed treatment-response model with nonparametric endogeneity

  • Brendan Kline

    (Department of Economics, Northwestern University, Evanston, IL, USA)

  • Justin L. Tobias

    (Department of Economics, Purdue University, West Lafayette, IN, USA)

We generalize the specifications used in previous studies of the effect of body mass index (BMI) on earnings by allowing the potentially endogenous BMI variable to enter the log wage equation nonparametrically. We introduce a Bayesian posterior simulator for fitting our model that permits a nonparametric treatment of the endogenous BMI variable, flexibly accommodates skew in the BMI distribution, and whose implementation requires only Gibbs steps. Using data from the 1970 British Cohort Study, our results indicate the presence of nonlinearities in the relationships between BMI and log wages that differ across men and women, and also suggest the importance of unobserved confounding for our sample of males. Copyright © 2008 John Wiley & Sons, Ltd.

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Article provided by John Wiley & Sons, Ltd. in its journal Journal of Applied Econometrics.

Volume (Year): 23 (2008)
Issue (Month): 6 ()
Pages: 767-793

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Handle: RePEc:jae:japmet:v:23:y:2008:i:6:p:767-793
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  1. Alan Manning, 2004. "Instrumental Variables for Binary Treatments with Heterogeneous Treatment Effects: A Simple Exposition," CEP Discussion Papers dp0619, Centre for Economic Performance, LSE.
  2. Philippe Robert-Demontrond & R. Ringoot, 2004. "Introduction," Post-Print halshs-00081823, HAL.
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  4. Gary Koop & Dale J Poirer, 2001. "Bayesian Variants of Some classical Semiparametric Regression Techniques," ESE Discussion Papers 73, Edinburgh School of Economics, University of Edinburgh.
  5. John Cawley, 2004. "The Impact of Obesity on Wages," Journal of Human Resources, University of Wisconsin Press, vol. 39(2).
  6. Charles L. Baum & William F. Ford, 2004. "The wage effects of obesity: a longitudinal study," Health Economics, John Wiley & Sons, Ltd., vol. 13(9), pages 885-899.
  7. Koop, Gary M & Poirier, Dale J & Tobias, Justin, 2007. "Bayesian Econometric Methods," Staff General Research Papers 12722, Iowa State University, Department of Economics.
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  9. L. Randall Wray & Stephanie Bell, 2004. "Introduction," Chapters, in: Credit and State Theories of Money, chapter 1 Edward Elgar.
  10. Joshua D. Angrist & Guido W. Imbens, 1995. "Identification and Estimation of Local Average Treatment Effects," NBER Technical Working Papers 0118, National Bureau of Economic Research, Inc.
  11. Wooldridge, Jeffrey M., 2003. "Further results on instrumental variables estimation of average treatment effects in the correlated random coefficient model," Economics Letters, Elsevier, vol. 79(2), pages 185-191, May.
  12. Murat K. Munkin & Partha Deb & Pravin K. Trivedi, 2006. "Bayesian analysis of the two-part model with endogeneity: application to health care expenditure," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 21(7), pages 1081-1099.
  13. Banerjee, Anurag, 2007. "A method of estimating the average derivative," Journal of Econometrics, Elsevier, vol. 136(1), pages 65-88, January.
  14. Geweke, John, 2007. "Interpretation and inference in mixture models: Simple MCMC works," Computational Statistics & Data Analysis, Elsevier, vol. 51(7), pages 3529-3550, April.
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