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Identification of models of the labor market

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  • Eric French
  • Christopher Taber

Abstract

This chapter discusses identification of common selection models of the labor market. We start with the classic Roy model and show how it can be identified with exclusion restrictions. We then extend the argument to the generalized Roy model, treatment effect models, duration models, search models, and dynamic discrete choice models. In all cases, key ingredients for identification are exclusion restrictions and support conditions.

Suggested Citation

  • Eric French & Christopher Taber, 2010. "Identification of models of the labor market," Working Paper Series WP-2010-08, Federal Reserve Bank of Chicago.
    • Handle: RePEc:fip:fedhwp:wp-2010-08
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    1. Ismaël Mourifié & Marc Henry & Romuald Méango, 2020. "Sharp Bounds and Testability of a Roy Model of STEM Major Choices," Journal of Political Economy, University of Chicago Press, vol. 128(8), pages 3220-3283.
    2. Lagakos, David & Marshall, Samuel & Mobarak, Ahmed Mushfiq & Vernot, Corey & Waugh, Michael E., 2020. "Migration costs and observational returns to migration in the developing world," Journal of Monetary Economics, Elsevier, vol. 113(C), pages 138-154.
    3. Salvador Navarro & Jin Zhou, 2017. "Identifying Agent's Information Sets: an Application to a Lifecycle Model of Schooling, Consumption, and Labor Supply," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 25, pages 58-92, April.
    4. Doligalski, Paweł & Rojas, Luis E., 2023. "Optimal redistribution with a shadow economy," Theoretical Economics, Econometric Society, vol. 18(2), May.
    5. Jason Allen & Robert Clark & Jean-François Houde, 2019. "Search Frictions and Market Power in Negotiated-Price Markets," Journal of Political Economy, University of Chicago Press, vol. 127(4), pages 1550-1598.
    6. Cornelissen, Thomas & Dustmann, Christian & Raute, Anna & Schönberg, Uta, 2016. "From LATE to MTE: Alternative methods for the evaluation of policy interventions," Labour Economics, Elsevier, vol. 41(C), pages 47-60.
    7. D’Haultfœuille, Xavier & Maurel, Arnaud, 2013. "Inference on an extended Roy model, with an application to schooling decisions in France," Journal of Econometrics, Elsevier, vol. 174(2), pages 95-106.
    8. Sam Jones & Finn Tarp, 2013. "Jobs and Welfare in Mozambique," WIDER Working Paper Series wp-2013-045, World Institute for Development Economic Research (UNU-WIDER).
    9. Arpit Gupta & Anup Malani & Bartosz Woda, 2021. "Inequality in India Declined During COVID," NBER Working Papers 29597, National Bureau of Economic Research, Inc.
    10. Osikominu, Aderonke & Pfeifer, Gregor, 2018. "Perceived Wages and the Gender Gap in STEM Fields," CEPR Discussion Papers 12719, C.E.P.R. Discussion Papers.
    11. Christopher Taber & Rune Vejlin, 2020. "Estimation of a Roy/Search/Compensating Differential Model of the Labor Market," Econometrica, Econometric Society, vol. 88(3), pages 1031-1069, May.
    12. Giorgio Calzolari & Maria Gabriella Campolo & Antonino Pino & Laura Magazzini, 2023. "Assessing individual skill influence on housework time of Italian women: an endogenous-switching approach," Statistical Methods & Applications, Springer;Società Italiana di Statistica, vol. 32(2), pages 659-679, June.
    13. Arpit Gupta & Anup Malani & Bartek Woda, 2021. "Explaining the Income and Consumption Effects of COVID in India," NBER Working Papers 28935, National Bureau of Economic Research, Inc.
    14. Erik Hurst & Patrick J. Kehoe & Elena Pastorino & Thomas Winberry, 2022. "The Distributional Impact of the Minimum Wage in the Short and Long Run," NBER Working Papers 30294, National Bureau of Economic Research, Inc.
    15. Vladimir Atanasov & Bernard Black, 2021. "The Trouble with Instruments: The Need for Pretreatment Balance in Shock-Based Instrumental Variable Designs," Management Science, INFORMS, vol. 67(2), pages 1270-1302, February.
    16. Schoellman, Todd, 2020. "Comment on “migration costs and observational returns to migration in the developing world”," Journal of Monetary Economics, Elsevier, vol. 113(C), pages 155-157.
    17. Lee, Ji Hyung & Park, Byoung G., 2023. "Nonparametric identification and estimation of the extended Roy model," Journal of Econometrics, Elsevier, vol. 235(2), pages 1087-1113.
    18. Keane, Michael P. & Todd, Petra E. & Wolpin, Kenneth I., 2011. "The Structural Estimation of Behavioral Models: Discrete Choice Dynamic Programming Methods and Applications," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 4, chapter 4, pages 331-461, Elsevier.
    19. Sebastian Galiani & Juan Pantano, 2021. "Structural Models: Inception and Frontier," NBER Working Papers 28698, National Bureau of Economic Research, Inc.

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    More about this item

    Keywords

    Labor market;

    JEL classification:

    • J0 - Labor and Demographic Economics - - General

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