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Inference on an extended Roy model, with an application to schooling decisions in France

Publication ,  Journal Article
D'Haultfœuille, X; Maurel, A
Published in: Journal of Econometrics
2013

This paper considers the identification and estimation of an extension of Roy's model (1951) of sectoral choice, which includes a non-pecuniary component in the selection equation and allows for uncertainty on potential earnings. We focus on the identification of the non-pecuniary component, which is key to disentangling the relative importance of monetary incentives versus preferences in the context of sorting across sectors. By making the most of the structure of the selection equation, we show that this component is point identified from the knowledge of the covariate effects on earnings, as soon as one covariate is continuous. Notably, and in contrast to most results on the identification of Roy models, this implies that identification can be achieved without any exclusion restriction nor large support condition on the covariates. As a by-product, bounds are obtained on the distribution of the ex ante monetary returns. We propose a three-stage semiparametric estimation procedure for this model, which yields root-n consistent and asymptotically normal estimators. Finally, we apply our results to the educational context, by providing new evidence from French data that non-pecuniary factors are a key determinant of higher education attendance decisions. © 2013 Elsevier B.V. All rights reserved.

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Published In

Journal of Econometrics

DOI

ISSN

0304-4076

Publication Date

2013

Related Subject Headings

  • Econometrics
  • 4905 Statistics
  • 3802 Econometrics
  • 3801 Applied economics
  • 1403 Econometrics
  • 1402 Applied Economics
  • 0104 Statistics
 

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D’Haultfœuille, X., & Maurel, A. (2013). Inference on an extended Roy model, with an application to schooling decisions in France. Journal of Econometrics. https://doi.org/10.1016/j.jeconom.2013.01.005
D’Haultfœuille, X., and A. Maurel. “Inference on an extended Roy model, with an application to schooling decisions in France.” Journal of Econometrics, 2013. https://doi.org/10.1016/j.jeconom.2013.01.005.
D’Haultfœuille X, Maurel A. Inference on an extended Roy model, with an application to schooling decisions in France. Journal of Econometrics. 2013;
D’Haultfœuille, X., and A. Maurel. “Inference on an extended Roy model, with an application to schooling decisions in France.” Journal of Econometrics, 2013. Scival, doi:10.1016/j.jeconom.2013.01.005.
D’Haultfœuille X, Maurel A. Inference on an extended Roy model, with an application to schooling decisions in France. Journal of Econometrics. 2013;
Journal cover image

Published In

Journal of Econometrics

DOI

ISSN

0304-4076

Publication Date

2013

Related Subject Headings

  • Econometrics
  • 4905 Statistics
  • 3802 Econometrics
  • 3801 Applied economics
  • 1403 Econometrics
  • 1402 Applied Economics
  • 0104 Statistics