Testing the binomial fixed effects logit model, with an application to female labour supply

Rainer Winkelmann and Lin Xu
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Lin Xu: University of Zurich

Empirical Economics, 2022, vol. 62, issue 2, No 15, 679-708

Abstract: Abstract Regression models for proportions are frequently encountered in applied work. The conditional expectation function is bounded between 0 and 1 and therefore must be nonlinear, requiring nonstandard panel data extensions. One possible approach is the binomial panel logit model with fixed effects (Machado in J Econom 119:73–98, 2004). We propose a new and simple implementation of this conditional maximum likelihood estimator for standard software. We investigate the properties of the estimator under misspecification and derive a new test for overdispersion. Estimator and test are applied in a study of contracted working volumes, measured as proportion of full-time work, for women in Switzerland.

Keywords: Proportions data; Unobserved heterogeneity; Conditional maximum likelihood; Overdispersion (search for similar items in EconPapers)
JEL-codes: C23 J21 (search for similar items in EconPapers)
Date: 2022
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DOI: 10.1007/s00181-021-02034-2

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