Consistent Estimation of Pseudo Panels in the Presence of Selection Bias

11 Pages Posted: 20 Jun 2012

See all articles by Jhon James Mora

Jhon James Mora

Universidad Icesi; Universidad ICESI; Universidad ICESI - Economics & Management

Juan Muro

Universidad de Alcalá

Date Written: 2012

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.

Keywords: Repeated cross-section models, selectivity bias testing, human capital

JEL Classification: C23, C52

Suggested Citation

Mora Rodriguez, Jhon James and Mora Rodriguez, Jhon James and Mora Rodriguez, Jhon James and Muro, Juan, Consistent Estimation of Pseudo Panels in the Presence of Selection Bias (2012). Economics Discussion Paper No. 2012-26, Available at SSRN: https://ssrn.com/abstract=2087931 or http://dx.doi.org/10.2139/ssrn.2087931

Jhon James Mora Rodriguez (Contact Author)

Universidad Icesi ( email )

Calle 18 #122-135
A.A. 25608
Cali
Colombia
5552334 ext 419 (Phone)

HOME PAGE: http://www.icesi.edu.co/~jjmora/

Universidad ICESI ( email )

Calle 18 #122-135
A.A. 25608
Cali
Colombia
5552334 ext 419 (Phone)

HOME PAGE: http://www.icesi.edu.co/~jjmora/

Universidad ICESI - Economics & Management ( email )

Cali
Colombia

Juan Muro

Universidad de Alcalá ( email )

Plaza de la Victoria s/n
Alcala de Henares, Madrid 28802
Spain

HOME PAGE: http://www2.uah.es/juanmuro

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