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Self-selectivity bias with a continuous variable: potential pitfall in a common procedure

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Abstract:

When the choice variable is continuous, selectivity bias can in principle be dealt with by a procedure first suggested by Garen (1984). However, work reported in this paper on the estimation of hedonic wage equations with compensation for dangerous jobs, where selectivity bias could arise through the endogenous choice of jobs according to their riskiness, suggests that the Garen technique may not be robust. The lack of robustness comes from collinearity, which is a result of the common situation where the empirical fit of the choice equation is moderately successful but not outstanding.

Document Type: Research Article

DOI: https://doi.org/10.1080/00036840010021726

Publication date: 2001-12-15

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