Efficiency of two-step estimators for censored systems of equations: Shonkwiler and Yen reconsidered

This study analyses a parametric estimator for a system of equations with limited dependent variables that was recently proposed. Its performance is compared with those of alternative estimation procedures using Monte Carlo methods. The comparison shows that this new estimator is less efficient for a wide range of parameter regions than multivariate generalizations of the classical Heckman model. This result can be explained by its variance depending on the squared conditional mean of the dependent variables. Additionally, it turns out that within the class of generalized Heckman estimators, rather simple ones display the best performance.     

Logistics performance and export competitiveness: European experience

Logistics performance has become a decisive factor in export competitiveness. At the same time, and as a result of the continuous enlargement processes it has undergone, the European Union (EU) is a very interesting case to study how the reforms that enhance logistics performance have affected exports. Therefore, this paper aims to analyse the importance of logistics performance in regard to EU exports over the period 2005–2010 in an attempt to identify possible advances on behalf of Member States. Several gravity equations are estimated using the Logistics Performance Index (LPI) and its components as characteristic proxy variables of trade facilitation. In order to avoid the possible heterogeneity caused by sample bias, the two-stage model proposed by Heckman is used. The estimations of the gravity models using the two-stage Heckman model for all 26 EU countries have led us to conclude that logistics was more important for exporting nations than importing nations in both 2005 and 2010, reinforcing the interest in the exporter side of the paper. In reference to the components of the LPI, Competence and Tracking has acquired greater importance in recent years, in keeping with the weak domestic demand in European countries and the search for new international markets.     

After the great recession : financial sophistication and housing leverage

US households face various choices in saving for retirement, with one of the most common decisions related to maintaining or paying off a mortgage. Using the 2010 and 2013 Survey of Consumer Finances, this study investigates the relationship between financial sophistication and mortgage decisions among middle-age households. A Heckman two-stage selection model is employed to investigate two separate decisions: mortgage holding and loan-to-value (LTV) ratios among mortgage holders. Results indicate that financial sophistication is positively associated with carrying a mortgage and higher LTV ratios. These results imply that financially sophisticated households may be using leverage to increase asset returns.     

Assessing policies to equalize opportunity using an equilibrium model of educational and occupational choices

The inter-generational correlation of education in the U.S. is tremendous. For instance, in PSID data from 1990, young males with college-educated parents had a 70% chance of attending college. But those with high school drop-out parents had only a 15% chance. In this paper, we analyze the impact of college attendance bonus schemes designed to increase college attendance rates (and PV of lifetime income) of youth from disadvantaged backgrounds. Of course, policies that increase the supply of skilled labor may reduce the college wage premium (see Heckman et al. [Heckman, James, Lochner, Lance and Taber, Christopher, Explaining rising wage inequality: explorations with a dynamic equilibrium model of labor earnings with heterogeneous agents, Review of Economic Dynamics, 1 (1998a), 1–58; Heckman, James, Lochner, Lance and Taber, Christopher, General-equilibrium treatment effects: a study of tuition policy, American Economic Review, 88:2 (1998b), 381–386]). This may have the unintended consequence of wiping out most of the gains to the targeted groups. The strength of such equilibrium effects on wages depends on the substitutability between different types of labor. Thus, it is important to evaluate education subsidies within an equilibrium framework that allows for flexible patterns of substitution across factor inputs. This is exactly what we do here, using an overlapping generations equilibrium model of the U.S. labor market fit to PSID data from 1968 to 1996. The model allows for imperfect substitution among types of labor differentiated by education, gender, age and ten (1-digit level) occupations — a much finer differentiation than has been considered in prior work.We find that very large college attendance bonuses are necessary to equate college attendance rates between youth whose parents had only high school degrees or were high school dropouts and youth whose parents attended at least some college. The size of these bonuses far exceeds any reasonable measure of college costs; suggesting the “costs” the bonuses overcome are primarily psychic or effort costs. For example, youth from disadvantaged backgrounds may be poorly prepared for college. This suggests that bonuses targeted at college age youth are probably a very inefficient way to reduce inequality. Earlier intervention is likely called for.     

Gender Bias in Education in West Bengal

This paper attempts to capture gender bias at two different levels of education, namely, below class-10 and above class-10 using NSSO 64th round education expenditure data on West Bengal. The analysis for the below class-10 level involves an intra household framework and Heckman’s two step model. Further, for this section the analysis is split up into classes 1–8 and classes 9–10 in view of the Right to Education act (2005). For above class-10 level, gender bias has been captured through a multinomial logit model for selection of subjects across households.

     

Population ageing,time allocation and human capital: A general equilibrium analysis for Canada

This study explores the long-term impact of population ageing on labour supply and human capital investment in Canada, as well as the induced effects on productive capacity. The analysis is conducted with a dynamic computable overlapping generations model where in the spirit of Becker [Becker, Gary (1965), A theory of the allocation of time, The Economic Journal, Vol. 75, pp. 493–517.] and Heckman [Heckman, James (1976), A life-cycle model of earnings, learning and consumption, The Quarterly Journal of Economics, Vol. 84, pp. 511–544], leisure has a quality-time feature and labour supply and human capital investment decisions are endogenous. The role of human capital in the growth process is based on the framework used by Mankiw et al. [Mankiw, N. Gregory, Romer, David and Weil, David N. (1992), A contribution to the empirics of economic growth, Quarterly Journal of Economics, Vol. 107, no. 2, pp. 407–437]. The paper indicates that population ageing creates more opportunities for young individuals to invest in human capital and supply more skilled labour at middle age. Consequently, the reduction in labour supply of young adults initially lowers productive capacity and exacerbates the economic costs of population ageing. However, current and future middle-age cohorts are more skilled and work more, which eventually raises productive capacity and significantly lowers the cost of population ageing. Finally, these results suggest that the recent increase in the participation rate of older workers might be the beginning of a new trend that will amplify over the next decades.     

Deriving conditional and unconditional marginal effects in log earnings equations estimated by Heckman's procedure

Although the Heckman approach has often been used in empirical analysis, the marginal effects, necessary to interpret the effect of the regressors on the dependent variable, appeared to be overlooked. Using the Heckman approach, general expressions are derived for calculating the conditional and unconditional marginal effects. Based on a sample of Brazilian women, the conditional and unconditional return to education are calculated for the logarithm of earnings equation estimated by Heckman's procedure, comparing them to the marginal effect of education obtained without correcting for selectivity bias. The same analysis is carried out for a discrete variable ‘black’.     

TRADE,STRUCTURAL REFORM,AND INSTITUTIONS IN SUB‐SAHARAN AFRICA

Sub‐Saharan African countries have traditionally lagged the rest of the developing world in terms of overall trade relative to gross domestic product. But, there is growing interest among these countries to initiate trade policies and improve quality of institutions as a way to promote trade and boost foreign direct investment. This article extends the gravity model of trade to include proxies for trade reform policy and institutional quality among the 15 countries of the Economic Community of West African States (ECOWAS) for data spanning 1984–2006. Alternative methods of estimation based on ordinary least squares, Heckman two‐step procedure, and Poisson pseudo‐maximum likelihood produce predictions that are consistent with the standard gravity model. They further highlight the evidence of restrictive trade policies and weak institutions that contribute to the failure of ECOWAS countries to boost bilateral trade. (JEL F13, F15, O19, O55)     

Explaining the spatial variation in housing prices: an economic geography approach

This study is concerned with the validation of parametric functional representations of the conditional mean of wages using Philippine data. This is done in the light of studies confirming relative weaknesses associated with parametric approaches to the modelling of human capital earnings functions (Zheng, 2000; Heckman et al., 2003; Lemieux, 2003; Miles and Mora, 2003). Extending the approaches in Lemieux (2003), Zheng (2000) and Miles and Mora (2003), we conduct consistent specification tests not only on parametric functional forms but also on the semiparametric partially linear model to verify the effect of modelling choice on the schooling-earnings as well as the experience-earnings relationships. Test results indicate that parametric models may still be valid representations of the wage function. In some instances, the semiparametric partially linear wage function holds promise as a modelling alternative to parametric models.     

农村工业化以及人力资本在农村劳动力市场中的角色

农村劳动力市场从多个渠道给教育带来了回报。用Heckman模型估计 ,教育的工资回报在 1 991— 1 997年为 0— 5% ,而且不显著。但是教育显著提高了人们到工业部门工作的机会 ,由此带来的回报在 5%— 7%。教育还提高了人们到高工资部门工作的机会 ,改善了人们的工作方式。     

An assessment of the impact of tax incentives relative to socio-economic characteristics on charitable giving in Canada

This research examines the effectiveness of the Canadian tax incentive system for charitable giving while attempting to deal with two persistent methodological problems in past research. The Heckman selection model and the ordered probit model are used to examine the Canadian tax incentive system with 2010 survey data. The results imply that the effect of the tax credit systematically increases with an increase in donation expenditure suggesting that the higher tax credit for larger donations is more effective than the lower tax credit for smaller donations. While the results suggest that the current tax policy is effective, socio-economic characteristics, such as wealth, household income, and university education, appear to have a greater impact on donations.     

Semiparametric Estimation of the Intercept of a Sample Selection Model

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 socio-economic groups (e.g. male–female and black–white), and evaluate the net benefits of a social programme.     

Income inequalities for recently graduated French workers: a multilevel modeling approach

This paper presents a simultaneous study of the impact of gender, occupational and localization inequalities on the earnings of higher education graduates. The framework draws on both individual level (i.e., pertaining to the individual elements of groups) and aggregate level (i.e., pertaining to the group as a whole) data under a single specification. To take into account the selection process for employment, our multilevel model uses the Heckman two-step procedure. Occupational Groups (OG) are found to capture around 40 % of the wage heterogeneity, whereas Employment Area (EA) nests capture less than 10 %. Higher wages are offered to young workers in (1) OG dominated by seniors and (2) OG dominated by men. These group characteristics also influence gender inequalities: there is a higher wage penalty for women in (1) OG dominated by men and (2) OG dominated by senior workers. In contrast to gender inequality, immigrant inequalities manifest closer links to EA.     

Indirect Re–employment Wage Discrimination

This paper looks at unemployed individuals and investigates wage differences generated by re–employment selection. It shows that discriminatory re–employment selection can result, indirectly, in discriminatory re–employment pay. A Heckman two–stage selection model is combined with an extension of Gomulka–Stern non–linear decompositions to explain how re–employment selection generates indirect discrimination. The paper uses data from pre–unification Germany in the late 1980s and finds that female human capital suffers more from unemployment and that the market is harsher to males for becoming unemployed. New policies should encourage a regime where the hiring process is more transparent and hiring decisions are monitored on a regular basis.     

Corporation Diversification and Firm Performance: Evidence from Vietnamese Listed Firms

We examine the effect of corporate diversification on the performance of firms listed on the Vietnamese stock exchanges, using 2744 firm year observations over the period from 2007 to 2012. We find that corporate diversification has a negative impact on firm performance. Our results are robust to various econometric estimation techniques including fixed effect, instrumental fixed effect, Heckman selection model and system generalised method of moments. In the Vietnamese context, the lack of an efficient corporate governance system may encourage firms to follow corporate diversification strategies, thus impairing their performance.     

融资约束与企业出口行为:基于工业企业数据的经验研究

采用2000—2007年的3万多家工业企业数据,本文构造了包括内源融资、商业信贷以及企业信用特征等变量的企业融资约束综合指标。基于Heckman选择模型的经验研究表明,企业融资状况的改善不仅能提高企业出口的概率,而且对其出口规模也有重要影响。研究还发现融资状况改善对外资企业出口影响最显著;与国有企业相比,民营企业虽受到更严重的融资约束,但其出口表现并未更差。此外,融资状况改善对那些高外源融资依赖度行业的企业出口具有更明显的促进作用。     

When outcome heterogeneously matters for selection: a generalized selection correction estimator

The classical Heckman (1976, 1979) selection correction estimator (heckit) is misspecified and inconsistent, if an interaction of the outcome variable with an explanatory variable matters for selection. To address this specification problem, a full information maximum likelihood (FIML) estimator and a simple two-step estimator are developed. Monte Carlo (MC) simulations illustrate that the bias of the ordinary heckit estimator is removed by these generalized estimation procedures. Along with OLS and ordinary heckit, we apply these estimators to data from a randomized trial that evaluates the effectiveness of financial incentives for reducing obesity. Estimation results indicate that the choice of the estimation procedure clearly matters.     

Promotional programmes and consumer purchasing decisions: pecan demand models

A generalized Heckman model of purchase decisions is estimated incorporating perceived consumer quality attributes, ease of purchase, and familiarity with marketing outlets as factors influencing pecan purchases. Economic implications for evaluating consumer purchase decisions and the design of commodity promotion programmes for the pecan industry are addressed. Key marketing variables such as the variety of uses for nut products, the number of outlets used to purchase pecans, and consumer perceptions of positive quality features of pecans are significant in promoting purchases. Applications of a trade-off analysis examine key variables considered by the pecan industry in developing promotional programmes both to stabilize pecan purchases and to maintain the probability of pecan purchases.     

Natural Disasters and Participation in Volunteer Activities: A Case Study of the Great Hanshin‐Awaji Earthquake

The Great Hanshin‐Awaji (Kobe) earthquake in 1995 has had a significant detrimental effect on the economic conditions of southern‐central Japan. However, the earthquake also led people to acknowledge the importance of the many volunteer activities in Japan at that time. Using a large sample of individual‐level data from 1991 and 1996, this study investigates how and the extent to which the earthquake increased the participation of students and house‐workers in volunteer activities. After controlling for various individual characteristics, a Heckman‐Tobit model was used and the following key findings were obtained: (1) the probability of students’ participating in volunteer activities was 2% higher after the earthquake than before, and (2) the number of days that students spent participating in volunteer activities was 4.38 days longer after the earthquake than before. However, the same did not hold true for house‐workers.     

A framework for estimating willingness-to-pay to avoid endogenous environmental risks

This paper proposes a general empirical strategy to estimate willingness-to-pay (WTP) for exogenous risk mitigation when environmental risks are endogenous in protective actions and consumers are imperfectly informed about the ambient risk levels. The strategy consists of a set of survey techniques and the dummy endogenous variable model (Heckman, 1978) to control for correlation in unobserved errors that enter the WTP equation and the protection-decision equation. The method is applied to the non-market valuation survey data on arsenic contamination in drinking water. Our results indicate that the estimated WTPs are significantly higher for households without self-protective action. Our approach thus offers not only the correct welfare estimate for exogenous reduction of environmental risks, but also yields policy implications qualitatively much different from the conventional approach. We also estimate the welfare value of the policy to inform and educate the public about the arsenic risk simultaneously with public risk mitigation. The estimated welfare value is similar to, though slightly higher than, that of risk mitigation without information component. This occurs due to the competing effects of information dissemination and risk mitigation efforts.