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Testing for Selectivity Bias in Panel Data Models
Marno Verbeek and Theo Nijman
International Economic Review
Vol. 33, No. 3 (Aug., 1992), pp. 681-703
Published by: Wiley for the Economics Department of the University of Pennsylvania and Institute of Social and Economic Research, Osaka University
Page Count: 23
You can always find the topics here!Topics: Estimation bias, Consistent estimators, Null hypothesis, Lagrange multipliers, Analytical estimating, Logical givens, Statistical variance, Degrees of freedom, Economic models
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We discuss several tests to check for the presence of selectivity bias in estimators based on panel data. One approach to test for selectivity bias is to specify the selection mechanism explicitly and estimate it jointly with the model of interest. Alternatively, one can derive the asymptotically efficient LM test. Both approaches are computationally demanding. In this paper, we propose the use of simple variable addition and (quasi-) Hausman tests for selectivity bias that do not require any knowledge of the response process. We compare the power of these tests with the asymptotically efficient test using Monte Carlo methods.
International Economic Review © 1992 Economics Department of the University of Pennsylvania