Estimation and interpretation of a Heckman selection model with endogenous covariates
Research output: Journal contributions › Journal articles › Research › peer-review
Standard
In: Empirical Economics, Vol. 49, No. 2, 05.09.2015, p. 675-703.
Research output: Journal contributions › Journal articles › Research › peer-review
Harvard
APA
Vancouver
Bibtex
}
RIS
TY - JOUR
T1 - Estimation and interpretation of a Heckman selection model with endogenous covariates
AU - Schwiebert, Jörg
PY - 2015/9/5
Y1 - 2015/9/5
N2 - In this paper, we develop a Heckman selection model with endogenous covariates. Estimation of this model is easy and can be done within any econometrics software which supports maximum likelihood estimation of the Heckman selection model. The most important benefit of our model is that it provides an easy-to-interpret measure of the composition of the fully observed sample with respect to unobservables. As an example, we apply our model to the study of the composition of the female full time full year workforce, as has been done by Mulligan and Rubinstein (Q J Econ 123:1061–1110, 2008). We find that their conclusion that the female workforce was negatively selected in the late 1970s is robust to accounting for the potential endogeneity of education in a Heckman selection model. However, we find that accounting for endogeneity leads to a huge increase in the estimated returns to education.
AB - In this paper, we develop a Heckman selection model with endogenous covariates. Estimation of this model is easy and can be done within any econometrics software which supports maximum likelihood estimation of the Heckman selection model. The most important benefit of our model is that it provides an easy-to-interpret measure of the composition of the fully observed sample with respect to unobservables. As an example, we apply our model to the study of the composition of the female full time full year workforce, as has been done by Mulligan and Rubinstein (Q J Econ 123:1061–1110, 2008). We find that their conclusion that the female workforce was negatively selected in the late 1970s is robust to accounting for the potential endogeneity of education in a Heckman selection model. However, we find that accounting for endogeneity leads to a huge increase in the estimated returns to education.
KW - Economics
KW - Composition of the female workforce
KW - Endogenous covariates
KW - Female labor force participation
KW - Gender wage gap
KW - Sample selection model
UR - http://www.scopus.com/inward/record.url?scp=84938557867&partnerID=8YFLogxK
U2 - 10.1007/s00181-014-0881-z
DO - 10.1007/s00181-014-0881-z
M3 - Journal articles
VL - 49
SP - 675
EP - 703
JO - Empirical Economics
JF - Empirical Economics
SN - 0377-7332
IS - 2
ER -