Chapter

Selectivity

Stephen Bazen

in Econometric Methods for Labour Economics

Published in print September 2011 | ISBN: 9780199576791
Published online January 2012 | e-ISBN: 9780191731136 | DOI: http://dx.doi.org/10.1093/acprof:oso/9780199576791.003.0005

Series: Practical Econometrics

Selectivity

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Selection mechanisms and the bias they introduce into econometric estimation constitute one of the principal concerns in empirical labour economics. Economic behaviour is based to a large extent on incentives and the existence of comparative advantage. This means that individuals' labour force participation, job choice, enrolment in the labour market, and educational programmes and mobility will all be influenced by the potential gains that exist (or are thought to exist). People self-select into different situations and types of status. This chapter presents econometric approaches developed by econometricians specifically to analyse these features of labour market behaviour. The major worry associated with these methods is that the models are constructed on the basis that the unobserved characteristics and factors captured by the error terms are normally distributed.

Keywords: empirical analysis; labour economics; selection mechanisms; labour market behaviour; normal distribution

Chapter.  8682 words.  Illustrated.

Subjects: Econometrics and Mathematical Economics

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