Is multivariate probit really useless in analysing off-farm labour participation of farm couples? A note
In a recent paper, Benjamin and Kimhi (2006) argued that using multivariate probit for analysing off-farm participation of farm couples suffers from a theoretical inconsistency. This note tries to clarify this issue, and illustrates the joint participation rules based on reservation wages of household members. The reservation wages of each household member is contingent on the participation status of the other member. Hence, participation rules have to keep into account the joint participation probabilities of the couple.
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