Distribution Regression with Selection, with an Application to Wage Decompositions in the UK
Ivan Fernandez-Val (Boston University)
We develop a semiparametric distribution regression model under endogenous sample selection.
This model is a semi-parametric generalization of Heckman selection model that accommodates much rich patterns of heterogeneity in the selection process and effect of the covariates. The model applies to continuous, discrete and mixed outcomes. We study the identification of the model, and develop a computationally attractive two-step method to estimate the model parameters, where the first step is a probit regression for the selection equation and the second step consists of multiple distribution regressions with selection corrections for the outcome equation. We construct estimators of functionals of interest such as actual and counterfactual distributions of latent and observed outcomes via plug-in rule. We derive functional central limit theorems for all the estimators and show the validity of multiplier bootstrap to carry out functional inference. We apply the methods to wage decompositions in the UK using new data. Here we decompose the difference between the male and female wage distributions into four effects: composition, wage structure, selection structure and selection sorting. We uncover positive sorting for single men and negative sorting for married women that accounts for a substantial fraction of the gender wage gap at the top of the distribution. These findings can be interpreted as evidence of assortative mating in the marriage market and glass-ceiling in the labor market.
(joint with Victor Chernozhukov and Siyi Luo)
Prof. Ivan Fernandez-Val is a professor of economics at BU department of economics. His research covers a broad field of econometrics and statistics, including panel data models, quantile regressions, and microeconometrics. He has published a number of highly influential papers on top journals, such as Econometrica, Review of Economic Studies, Journal of Econometrics, etc., and has received 2500+ citations. He currently serves as the managing editor of Econometric Theory, and associated editor at many of leading journals, including JOE, JBES, and EJ.
For more information, please visit http://sites.bu.edu/ivanf/