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Binary Endogenous Treatment in Stochastic Frontier Models with an Application to Soil Conservation in El Salvador

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  • Centorrino, Samuele
  • Perez Urdiales, Mari­a
  • Bravo-Ureta, Boris
  • Wall, Alan

Abstract

Numerous programs exist to promote productivity, alleviate poverty, and enhance food security in developing countries. Stochastic frontier analysis can be helpful to assess their effectiveness. However, challenges can arise when accounting for treatment endogeneity, often intrinsic to these interventions. We study maximum likelihood estimation of stochastic frontier models when both the frontier and inefficiency depend on a potentially endogenous binary treatment. We use instrumental variables to define an assignment mechanism and explicitly model the density of the first and second‐stage error terms. We provide empirical evidence using data from a soil conservation program in El Salvador.
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Suggested Citation

  • Centorrino, Samuele & Perez Urdiales, Mari­a & Bravo-Ureta, Boris & Wall, Alan, 2021. "Binary Endogenous Treatment in Stochastic Frontier Models with an Application to Soil Conservation in El Salvador," 95th Annual Conference, March 29-30, 2021, Warwick, UK (Hybrid) 312058, Agricultural Economics Society - AES.
    • Handle: RePEc:ags:aesc21:312058
    DOI: 10.22004/ag.econ.312058
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    Cited by:

    1. Chakraborty, Subarta & Mishra, Ashok K. & Yan, Hongqiang, 2025. "Impact of Rural Employment Guarantee Program on Farming Efficiency: Evidence from an Emerging Economy," 2025 AAEA & WAEA Joint Annual Meeting, July 27-29, 2025, Denver, CO 360648, Agricultural and Applied Economics Association.
    2. Pérez Urdiales, María & Libra, Jesse Madden & Machado, Kleber & Serebrisky, Tomás & Solís, Ben, 2022. "Water Bill Perception in Brazil: Do Households Get It Right?," IDB Publications (Working Papers) 12212, Inter-American Development Bank.
    3. Pérez-Urdiales, María & Libra, Jesse M. & Machado, Kleber B. & Serebrisky, Tomás & Sosa, Ben Solís, 2024. "Household water bill perception in Brazil," Utilities Policy, Elsevier, vol. 87(C).

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