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Consistent estimation of pseudo panels in the presence of selection bias

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  • Mora Rodriguez, Jhon James
  • Muro, Juan

Abstract

In the presence of selection bias, traditional estimators of pseudo panel data are inconsistent. In this paper, the authors derive the conditions under which consistence is achieved in pseudo-panel estimation and propose a simple test of selection bias. Specifically, they propose a Wald test for the null hypothesis that there is no selection bias. Under rejection of the null hypothesis, the authors can consistently estimate pseudo-panel parameters. They use cross sections and pseudo-panel regressions to test for selection bias and estimate the returns to education in Colombia. The authors corroborate the existence of selection bias and find that returns to education are around twenty percent.

Suggested Citation

  • Mora Rodriguez, Jhon James & Muro, Juan, 2012. "Consistent estimation of pseudo panels in the presence of selection bias," Economics Discussion Papers 2012-26, Kiel Institute for the World Economy (IfW Kiel).
    • Handle: RePEc:zbw:ifwedp:201226
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    Cited by:

    1. Pallavi Panda, 2020. "Selective Mortality and Malnutrition in India," Journal of Quantitative Economics, Springer;The Indian Econometric Society (TIES), vol. 18(4), pages 861-890, December.

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    More about this item

    Keywords

    Repeated cross-section models; selectivity bias testing; human capital;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • C52 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Evaluation, Validation, and Selection

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