Simultaneity in binary outcome models with an application to employment for couples

Bo E. Honoré (), Luojia Hu, Ekaterini Kyriazidou () and Martin Weidner ()
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Bo E. Honoré: Princeton University
Ekaterini Kyriazidou: New York University Abu Dhabi
Martin Weidner: University of Oxford

Empirical Economics, 2023, vol. 64, issue 6, No 26, 3197-3233

Abstract: Abstract Two of Peter Schmidt’s many contributions to econometrics have been to introduce a simultaneous logit model for bivariate binary outcomes and to study estimation of dynamic linear fixed effects panel data models using short panels. In this paper, we study a dynamic panel data version of the bivariate model introduced in Schmidt and Strauss (Econometrica 43:745–755, 1975) that allows for lagged dependent variables and fixed effects as in Ahn and Schmidt (J Econom 68:5–27, 1995). We combine a conditional likelihood approach with a method of moments approach to obtain an estimation strategy for the resulting model. We apply this estimation strategy to a simple model for the intra-household relationship in employment. Our main conclusion is that the within-household dependence in employment differs significantly by the ethnicity composition of the couple even after one allows for unobserved household specific heterogeneity.

Keywords: Simultaneity; Binary response; Fixed effects; Moment conditions; Employment (search for similar items in EconPapers)
JEL-codes: C01 C33 C35 E24 (search for similar items in EconPapers)
Date: 2023
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Chapter: Simultaneity in binary outcome models with an application to employment for couples (2024)
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Working Paper: Simultaneity in Binary Outcome Models with an Application to Employment for Couples (2022)
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DOI: 10.1007/s00181-023-02417-7

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