✦ LIBER ✦

Estimation of sample selection models with spatial dependence

✍ Scribed by Alfonso Flores-Lagunes; Kurt Erik Schnier

Publisher: John Wiley and Sons
Year: 2010
Tongue: English
Weight: 202 KB
Volume: 27
Category: Article
ISSN: 0883-7252
DOI: 10.1002/jae.1189

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✦ Synopsis

SUMMARY

We consider the estimation of a sample selection model that exhibits spatial autoregressive errors (SAE). Our methodology is motivated by a two‐step strategy where in the first step we estimate a spatial probit model and in the second step (outcome equation) we include an estimated inverse Mills ratio (IMR) as a regressor to control for selection bias. Since the appropriate IMR under SAE depends on a parameter from the second step, both steps are jointly estimated employing the generalized method of moments. We explore the finite sample properties of the estimator using simulations and provide an empirical illustration. Copyright © 2010 John Wiley & Sons, Ltd.

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