Semiparametric estimation of a sample selection model with a binary endogenous regressor: the effect of chronicity in labour supply
Autor:
Moreno-Mencía, Patricia
; Cantarero-Prieto, David
; Rodriguez-Poo, Juan M.
Fecha:
2023Palabra clave:
Revista / editorial:
Applied EconomicsCitación:
Patricia Moreno-Mencía, David Cantarero-Prieto & Juan Rodriguez-Poo (2023) Semiparametric estimation of a sample selection model with a binary endogenous regressor: the effect of chronicity in labour supply, Applied Economics, 55:15, 1682-1699, DOI: 10.1080/00036846.2022.2099521Tipo de Ítem:
Articulo Revista IndexadaResumen:
The aim of this paper is to investigate the effect of chronicity in labour supply and the participation equation in a flexible framework. We analyse a semiparametric model for data including problems of sample selection and endogeneity, because a regressor is correlated with the disturbance term. One approach is to specify a simultaneous equation model where a dummy endogenous variable accounting for chronicity is included in the structural and selection equation. We propose a consistent estimator of the structural parameters robust to misspecification. The endogeneity and the selection are assumed to be nonparametric and the conditional distribution of the errors is left unspecified. Using a control function approach, the resulting estimator is obtained through a new pairwise differencing transformation. In addition to its empirical performance, the asymptotic properties are established. Our empirical findings confirm the idea that having a chronic illness has a negative effect on income, accounting for an approximately (Formula presented.) decrease in expected income, which is close to the finding of Currie and Madrian (1999).
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