Gamma Unobserved Heterogeneity and Duration Bias
R�ed et al. (1999) demonstrate that the standard result of known negative duration bias does not necessarily hold in a two-state mixed proportional hazard (MPH) model. We show that the duration bias is still ambiguous in a MPH model with a multivariate gamma distribution. A discrete time two-state version of our MPH model is developed to analyze the duration of higher education. The estimation results show that we cannot reject the hypothesis that the two unobserved heterogeneity variables are uncorrelated. Accepting this hypothesis implies that the standard result holds in our analysis.
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Volume (Year): 29 (2010)
Issue (Month): 1 ()
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- Lancaster, Tony, 1979. "Econometric Methods for the Duration of Unemployment," Econometrica, Econometric Society, vol. 47(4), pages 939-56, July.
- Zhang, Tao, 2003. "A Monte Carlo study on non-parametric estimation of duration models with unobserved heterogeneity," Memorandum 25/2003, Oslo University, Department of Economics.
- Knut Roed & Oddbjorn Raaum & Harald Goldstein, 1999. "Does unemployment cause unemployment? Micro evidence from Norway," Applied Economics, Taylor & Francis Journals, vol. 31(10), pages 1207-1218.
- Lofgren, Curt & Ohlsson, Henry, 1999. "What determines when undergraduates complete their theses? Evidence from two economics departments," Economics of Education Review, Elsevier, vol. 18(1), pages 79-88, February.
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