IDEAS home Printed from
   My bibliography  Save this article

Heteroskedastic Sample Selection And Developing-Country Wage Equations


  • Julie Anderson Schaffner


Many researchers have dealt with potential selectivity bias in developing country wage equations by employing Heckman's (1979) two-step method or related techniques, despite the potential for such methods to produce misleading results if the assumptions on which they are based are incorrect. This paper argues that the results produced even by parametric, easy-to-implement selectivity bias-correction methods can inspire more confidence than the typical applications to date when model selection testing is used to select (from a specified, diverse set) assumptions for which there is support in the data, and when sensitivity analysis is used to identify parameters whose estimates are robust across a wide range of assumptions. In particular, it highlights the importance of allowing for (the nonlinearities implied by) selection rule heteroskedasticity. There is economic reason to suspect heteroskedasticity and econometric reason to believe that the nonlinearities it introduces into the first stage will improve the performance of two-stage estimators. In an application to urban Peru, homoskedasticity is strongly rejected, and, in models allowing for heteroskedasticity, selection rule normality is no longer rejected, and estimates of key parameters become more robust to changes in other statistical assumptions. Because the nonlinearities appear to be captured well by the inclusion of quadratic terms in the first stage, the results suggest that researchers may have much to gain by including quadratic terms in standard probit selection rule estimation. © 2002 by the President and Fellows of Harvard College and the Massachusetts Institute of Technology

Suggested Citation

  • Julie Anderson Schaffner, 2002. "Heteroskedastic Sample Selection And Developing-Country Wage Equations," The Review of Economics and Statistics, MIT Press, vol. 84(2), pages 269-280, May.
  • Handle: RePEc:tpr:restat:v:84:y:2002:i:2:p:269-280

    Download full text from publisher

    File URL:
    Download Restriction: Access to full text is restricted to subscribers.

    As the access to this document is restricted, you may want to search for a different version of it.


    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

    Cited by:

    1. repec:bla:obuest:v:79:y:2017:i:5:p:747-768 is not listed on IDEAS
    2. M. Shahe Emran & Forhad Shilpi, 2017. "Land Market Restrictions, Women's Labour Force Participation and Wages in a Rural Economy," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 79(5), pages 747-768, October.
    3. Vuong Quoc, Duy, 2012. "Determinants of household access to formal credit in the rural areas of the Mekong Delta, Vietnam," MPRA Paper 38202, University Library of Munich, Germany.
    4. repec:bla:indres:v:56:y:2017:i:3:p:459-488 is not listed on IDEAS

    More about this item


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:tpr:restat:v:84:y:2002:i:2:p:269-280. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Kristin Waites). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.