Identification and Estimation of Dynamic Binary Response Panel Data Models: Empirical Evidence Using Alternative Approaches
Kenneth Y. Chay and
Dean Hyslop ()
A chapter in Safety Nets and Benefit Dependence, 2014, vol. 39, pp 1-39 from Emerald Publishing Ltd
Abstract We examine the roles of sample initial conditions and unobserved individual effects in consistent estimation of the dynamic binary response panel data model. Different specifications of the model are estimated using female welfare and labor force participation data from the Survey of Income and Program Participation. These include alternative random effects (RE) models, in which the conditional distributions of both the unobserved heterogeneity and the initial conditions are specified, and fixed effects (FE) conditional logit models that make no assumptions on either distribution. There are several findings. First, the hypothesis that the sample initial conditions are exogenous is rejected by both samples. Misspecification of the initial conditions results in drastically overstated estimates of the state dependence and understated estimates of the short- and long-run effects of children on labor force participation. The FE conditional logit estimates are similar to the estimates from the RE model that is flexible with respect to both the initial conditions and the correlation between the unobserved heterogeneity and the covariates. For female labor force participation, there is evidence that fertility choices are correlated with both unobserved heterogeneity and pre-sample participation histories.
Keywords: Binary response panel data; state dependence; unobserved heterogeneity; initial conditions; random effects and fixed effects models; C23; C25; I39; J22 (search for similar items in EconPapers)
References: Add references at CitEc
Citations: View citations in EconPapers (38) Track citations by RSS feed
Downloads: (external link)
http://www.emeraldinsight.com/10.1108/S0147-912120 ... RePEc&WT.mc_id=RePEc (text/html)
Access to full text is restricted to subscribers
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:eme:rleczz:s0147-912120140000039001
Ordering information: This item can be ordered from
Emerald Group Publishing, Howard House, Wagon Lane, Bingley, BD16 1WA, UK
http://www.emeraldgr ... ies.htm?id=0147-9121
Access Statistics for this chapter
More chapters in Research in Labor Economics from Emerald Publishing Ltd
Bibliographic data for series maintained by Charlotte Maiorana ().