Sharp Bounds in the Binary Roy Model

Abstract:     
We derive the empirical content of an instrumental variables model of sectoral choice with binary outcomes. Assumptions on selection include the simple, extended and generalized Roy models. The derived bounds are nonparametric intersection bounds and are simple enough to lend themselves to existing inference methods. Identification implications of exclusion restrictions are also derived.

Number of Pages in PDF File: 34

Keywords: treatment effect, discrete outcomes, sectorial choice, partial identification, intersection bounds

JEL Classification: C21, C25, C26

working papers series