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72
Mobility and the return to education: Testing a Roy Model with multiple markets
 ECONOMETRICA
, 2002
"... Selfselected migration presents one potential explanation for why observed returns to a college education in local labor markets vary widely even though U.S. workers are highly mobile. To assess the impact of selfselection on estimated returns, this paper first develops a Roy model of mobility and ..."
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Cited by 183 (0 self)
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Selfselected migration presents one potential explanation for why observed returns to a college education in local labor markets vary widely even though U.S. workers are highly mobile. To assess the impact of selfselection on estimated returns, this paper first develops a Roy model of mobility and earnings where workers choose in which of the 50 states (plus the District of Columbia) to live and work. Available estimation methods are either infeasible for a selection model with so many alternatives or place potentially severe restrictions on earnings and the selection process. This paper develops an alternative econometric methodology which combines Lee's (1983) parametric maximum order statistic approach to reduce the dimensionality of the error terms with more recent work on semiparametric estimation of selection models (e.g., Ahn and Powell, 1993). The resulting semiparametric correction is easy to implement and can be adapted to a variety of other polychotomous choice problems. The empirical work, which uses 1990 U.S. Census data, confirms the role of comparative advantage in mobility decisions. The results suggest that selfselection of higher educated individuals to states with higher returns to education generally leads to upward biases in OLS estimates of the returns to education in statespecific labor markets. While the estimated returns to a college education are significantly biased, correcting for the bias does not narrow the range of returns across states. Consistent with the finding that the corrected return to a college education differs across the U.S., the relative statetostate migration flows of college versus high schooleducated individuals respond strongly to differences in the return to education and amenities across states.
An empirical framework for testing theories about complementarity in organizational design
, 1997
"... This paper studies alternative empirical strategies for estimating the effects of organizational design practices on performance, as well as the factors which determine organizational design, in a crosssection of firms. In particular, we propose an approach for estimating the parameters of an “org ..."
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Cited by 174 (6 self)
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This paper studies alternative empirical strategies for estimating the effects of organizational design practices on performance, as well as the factors which determine organizational design, in a crosssection of firms. In particular, we propose an approach for estimating the parameters of an “organizational design production function.” Further, we identify consistent tests for two classes of hypotheses: first, that some sets of organizational design practices are mutually complementary; and second, that adoption patterns are consistent with static optimization of the organization’s profit. We develop an economic model where multiple organizational design practices are endogenously determined. The model includes exogenous variation in the costs and returns to each of the individual practices, which is the source of the heterogeneity among organizations. In many empirical applications, some of these variables will be unobserved to the econometrician. The model is used to evaluate how different econometric strategies can be interpreted under alternative assumptions about the economic and statistical environment. Of particular interest are a set of results which demonstrate that, under plausible hypotheses about the joint distribution of the unobservables, different reducedform approaches used in the existing literature to test
Endogeneity in Nonparametric and Semiparametric Regression Models
, 2000
"... This paper considers the nonparametric and semiparametric methods for estimating regression models with continuous endogenous regressors. We list a number of different generalizations of the linear structural equation model, and discuss how three common estimation approaches for linear equations — t ..."
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Cited by 129 (19 self)
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This paper considers the nonparametric and semiparametric methods for estimating regression models with continuous endogenous regressors. We list a number of different generalizations of the linear structural equation model, and discuss how three common estimation approaches for linear equations — the “instrumental variables, ” “fitted value, ” and “control function ” approaches — may or may not be applicable to nonparametric generalizations of the linear model and to their semiparametric variants. The discussion then turns to a particular semiparametric model, the binary response model with linear index function and nonparametric error distribution, and describes in detail how estimation of the parameters of interest can be constructed using the “control function ” approach. This estimator is then applied to an empirical problem of the relation of labor force participation to nonlabor income, viewed as an endogenous regressor.
Much ado about two: reconsidering retransformation and the twopart model in health econometrics
 Journal of Health Economics
, 1998
"... in health econometrics ..."
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Semiparametric estimation of the intercept of a sample selection model
 Review of Economic Studies
, 1998
"... This paper provides a consistent and asymptotically normal estimator for the intercept of a semiparametrically estimated sample selection model. The estimator uses a decreasingly small fraction of all observations as the sample size goes to infinity, as in Heckman (1990). In the semiparametrics lite ..."
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Cited by 67 (2 self)
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This paper provides a consistent and asymptotically normal estimator for the intercept of a semiparametrically estimated sample selection model. The estimator uses a decreasingly small fraction of all observations as the sample size goes to infinity, as in Heckman (1990). In the semiparametrics literature, estimation of the intercept has typically been subsumed in the nonparametric sample selection bias correction term. The estimation of the intercept, however, is important from an economic perspective. For instance, it permits one to determine the "wage gap " between unionized and nonunionized workers, decompose the wage differential between different socioeconomic groups (e.g. malefemale and blackwhite), and evaluate the net benefits of a social programme. 1.
Semiparametric Estimation of a Simultaneous Game with Incomplete Information
 Journal of Econometrics
, 2010
"... We analyze a 2 × 2 simultaneous game. We start by showing that a likelihood function defined over the set of four observable outcomes and all possible variations of the game exists only if players have incomplete information. We assume a general incomplete information structure, where players ’ beli ..."
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Cited by 52 (7 self)
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We analyze a 2 × 2 simultaneous game. We start by showing that a likelihood function defined over the set of four observable outcomes and all possible variations of the game exists only if players have incomplete information. We assume a general incomplete information structure, where players ’ beliefs are conditioned on a vector of signals Z observable by the researcher but whose exact distribution is known only to the players. The resulting BayesianNash equilibrium (BNE) is characterized as a vector of conditional moment restrictions. We show how to exploit the information contained in these equilibrium conditions efficiently. The proposal takes the form of a twostep estimator. The first step estimates the unknown equilibrium beliefs using semiparametric restrictions analog to the population BNE conditions. The second step maximizes a trimmed loglikelihood function using the estimates from the first step as plugins for the unknown equilibrium beliefs. The trimming set is an interior subset of the support of Z where the BNE conditions have a unique solution. The resulting estimator of the vector of structural parameters ‘θ ’ is √ N−consistent and exploits all information in the model efficiently. We allow Z to
An Adaptive Estimation of Dimension Reduction Space
, 2002
"... Searching for an effective dimension reduction space is an important problem in regression, especially for high dimensional data. In this paper, we propose an adaptive approach based on semiparametric models, which we call the minimum average (conditional) variance estimation (MAVE) method, within q ..."
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Cited by 45 (2 self)
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Searching for an effective dimension reduction space is an important problem in regression, especially for high dimensional data. In this paper, we propose an adaptive approach based on semiparametric models, which we call the minimum average (conditional) variance estimation (MAVE) method, within quite a general setting. The MAVE method has the following advantages: (1) Most existing methods have to undersmooth the nonparametric link function estimator in order to achieve a faster rate of consistency for the estimator of the parameters (than for that of the nonparametric function). In contrast, a faster consistency rate can be achieved by the MAVE method even without undersmoothing the nonparametric link function estimator. (2) The MAVE method is applicable to a wide range of models, with fewer restrictions on the distribution of the covariates, to the extent that even time series can be included. (3) Because of the faster rate of consistency for the parameter estimators, it is possible for us to estimate the dimension of the space consistently.
Changes in the Distribution of Male and Female Wages Accounting for the Employment Composition,”unpublished paper
 Institute for Fiscal Studies, 7 Ridgmount
, 2002
"... This paper presents estimates of the changing distribution of wages that are robust to possible selection effects. We find convincing evidence of an increase in overall inequality, changes in the “return ” to education and increases in inequality within age and education groups. On the other hand we ..."
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Cited by 36 (0 self)
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This paper presents estimates of the changing distribution of wages that are robust to possible selection effects. We find convincing evidence of an increase in overall inequality, changes in the “return ” to education and increases in inequality within age and education groups. On the other hand we find that the increase in the relative wages of women may have been driven by selection. 1 Introduction and