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A causal interpretation of extensive and intensive margin effects in generalized Tobit models

  • Kevin E. Staub


    (Socioeconomic Institute, University of Zurich)

The usual decomposition of effects in corner solution models into extensive and intensive margins is generally incompatible with a causal interpretation. This paper proposes a decomposition based on the joint distribution of potential outcomes which is meaningful in a causal sense. The difference between decompositions can be substantial and yield diametrically opposed results, as shown in a standard Tobit model example. In a generalized Tobit application exploring the effect of reducing firm entry regulation on bilateral trade flows between countries, estimates suggest that using the usual decomposition would overstate the contribution of the extensive margin by around 15%.

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Paper provided by Socioeconomic Institute - University of Zurich in its series SOI - Working Papers with number 1012.

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Length: 32 pages
Date of creation: Nov 2010
Date of revision:
Handle: RePEc:soz:wpaper:1012
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  1. Elhanan Helpman & Marc Melitz & Yona Rubinstein, 2007. "Estimating Trade Flows: Trading Partners and Trading Volumes," NBER Working Papers 12927, National Bureau of Economic Research, Inc.
  2. Trejo, Stephen J, 1993. "Overtime Pay, Overtime Hours, and Labor Unions," Journal of Labor Economics, University of Chicago Press, vol. 11(2), pages 253-78, April.
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  4. Co, Catherine Yap, 2010. "Intra- and inter-firm US trade," International Review of Economics & Finance, Elsevier, vol. 19(2), pages 260-277, April.
  5. Klein, Roger & Vella, Francis, 2006. "A Semiparametric Model for Binary Response and Continuous Outcomes Under Index Heteroscedasticity," IZA Discussion Papers 2383, Institute for the Study of Labor (IZA).
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  7. Gabriel J. Felbermayr & Wilhelm Kohler, 2004. "Exploring the Intensive and Extensive Margins of World Trade," CESifo Working Paper Series 1276, CESifo Group Munich.
  8. Aakvik, Arild & Heckman, James J. & Vytlacil, Edward J., 2005. "Estimating treatment effects for discrete outcomes when responses to treatment vary: an application to Norwegian vocational rehabilitation programs," Journal of Econometrics, Elsevier, vol. 125(1-2), pages 15-51.
  9. Terza, Joseph V., 1998. "Estimating count data models with endogenous switching: Sample selection and endogenous treatment effects," Journal of Econometrics, Elsevier, vol. 84(1), pages 129-154, May.
  10. Xuepeng Liu, 2009. "GATT/WTO Promotes Trade Strongly: Sample Selection and Model Specification," Review of International Economics, Wiley Blackwell, vol. 17(3), pages 428-446, 08.
  11. Hallak, Juan Carlos, 2006. "Product quality and the direction of trade," Journal of International Economics, Elsevier, vol. 68(1), pages 238-265, January.
  12. Chiburis, Richard C., 2010. "Semiparametric bounds on treatment effects," Journal of Econometrics, Elsevier, vol. 159(2), pages 267-275, December.
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