SHARP BOUNDS AND TESTABILITY OF A ROY MODEL OF STEM MAJOR CHOICES

Ismael Mourifie, Marc Henry and Romuald Méango

Working Papers from University of Toronto, Department of Economics

Abstract: We analyze the empirical content of the Roy model, stripped down to its essential features, namely sector specific unobserved heterogeneity and self-selection on the basis of potential outcomes. We characterize sharp bounds on the joint distribution of potential outcomes and testable implications of the Roy self-selection model under an instrumental constraint on the joint distribution of potential outcomes we call stochastically monotone instrumental variable (SMIV). We show that testing the Roy model selection is equivalent to testing stochastic monotonicity of observed outcomes relative to the instrument. We apply our sharp bounds to the derivation of a measure of departure from Roy self-selection to identify values of observable characteristics that induce the most costly misallocation of talent and sector and are therefore prime targets for intervention. Special emphasis is put on the case of binary outcomes, which has received little attention in the literature to date. For richer sets of outcomes, we emphasize the distinction between point-wise sharp bounds and functional sharp bounds, and its importance, when constructing sharp bounds on functional features, such as inequality measures. We analyze a Roy model of college major choice in Canada and Germany within this framework, and we take a new look at the under-representation of women in STEM.

Keywords: Roy model; sectorial choice; partial identification; stochastic monotonicity; intersection bounds; functional sharp bounds; inequality; optimal transport; returns to education; college major; gender profiling; STEM; SMIV. (search for similar items in EconPapers)
JEL-codes: C31 C34 C35 I21 J24 (search for similar items in EconPapers)
Pages: Unknown pages
Date: 2018-11-12
New Economics Papers: this item is included in nep-ecm
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Citations: View citations in EconPapers (6)

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Related works:
Journal Article: Sharp Bounds and Testability of a Roy Model of STEM Major Choices (2020)
Working Paper: Sharp bounds and testability of a Roy model of STEM major choices (2019)
Working Paper: Sharp Bounds and Testability of a Roy Model of STEM Major Choices (2018)
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