[go: up one dir, main page]
IDEAS home Printed from https://ideas.repec.org/p/col/000130/003559.html
   My bibliography  Save this paper

Testing for sample selection bias in pseudo panels: Theory and Monte Carlo

Author

Listed:
  • Jhon James Mora
  • Juan Muro
Abstract
Sample selection bias is commonly used in economic models based on micro data. Despite the continuous generalization of panel data surveys, most countries still collect microeconomic information on the behavior of economic agents by means of repeated independent and representative cross-sections. This paper discusses a simple testing procedure for sample selection bias in pseudo panels. In the context of conditional mean independence panel data models we describe a pseudo panel model in which under convenient expansion of the original specification with a selectivity bias correction term the method allows us to use a Wald test of H0: ρ=0 as a test of the null hypothesis of absence of sample selection bias. We show that the proposed selection bias correction term is proportional to Inverse Mills ratio with an argument equal to the normit" of a consistent estimation of the observed proportion of individuals in each cohort. This finding can be considered a cohort counterpart of Heckman´s selectivity bias correction for the individual case and generalizes to some extent previous existing results in the empirical labour literature. Monte Carlo analysis shows the test does not reject the null for fixed T at a 5% significance level in finite samples and increases its power when utilizing cohort size corrections as suggested by Deaton (1985). As a "side effect" our method enables us to make a consistent estimation of the pseudo panel parameters under rejection of the null."

Suggested Citation

  • Jhon James Mora & Juan Muro, 2007. "Testing for sample selection bias in pseudo panels: Theory and Monte Carlo," Borradores de Economía y Finanzas 3559, Universidad Icesi.
    • Handle: RePEc:col:000130:003559
    as

    Download full text from publisher

    File URL: http://www.icesi.edu.co/dptoeni/publicaciones/docs/BORRAECO/Borrador10-Montecarlo(2).pdf
    Download Restriction: no
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Jhon James Mora & Juan Muro, 2007. "Diploma earning differences by gender in Colombia," Alcamentos 0802, Universidad de Alcalá, Departamento de Economía., revised 2008.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:col:000130:003559. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Coordinador ICESI (email available below). General contact details of provider: https://edirc.repec.org/data/deiceco.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.