PANEL DATA BINARY RESPONSE MODEL IN A TRIANGULAR SYSTEM

Amaresh K Tiwari

No 110, University of Tartu - Faculty of Economics and Business Administration Working Paper Series from Faculty of Economics and Business Administration, University of Tartu (Estonia)

Abstract: We propose a new control function (CF) method for binary response outcomes in a triangular system with unobserved heterogeneity of multiple dimensions. The identified CFs are the expected values of the heterogeneity terms in the reduced form equations conditional on the endogenous, Xi ≡ (xi1, . . . ,xiT ), and the exogenous, Zi ≡ (zi1, . . . , ziT ), variables. The method requires weaker restrictions compared to traditional CF methods for triangular systems with imposed structures similar to ours, and point-identifies average partial effects with discrete instruments. We discuss semiparametric identification of structural measures using the proposed CFs. An application and Monte Carlo experiments compare several alternative methods with ours.

Keywords: Control Functions; Unobserved Heterogeneity; Identification; Instrumental Variables; Average Partial Effects; Child Labor. (search for similar items in EconPapers)
JEL-codes: C13 C18 C33 (search for similar items in EconPapers)
Pages: 57 pages
Date: 2018
New Economics Papers: this item is included in nep-ecm
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