The Empirical Content of the Roy Model

James J Heckman and Bo E Honore

Econometrica, 1990, vol. 58, issue 5, 1121-49

Abstract: This paper explores the robustness of the essential economic conclusions of the Roy model of self-selection and income inequality to relaxation of its normality assumptions. A log concave version of the model reproduces most of the main results. Log convex cases offer counterexamples. The authors show that in a Roy economy, random assignment is inegalitarian and Pareto inefficient. They consider nonparametric identifiability of latent skill distributions with cross-section and panel data. The authors' analysis proves nonparametric identifiability for the closely related competing risks model. Copyright 1990 by The Econometric Society.

Date: 1990
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