Sharp Bounds in the Binary Roy Model

Posted: 17 Jan 2012 Last revised: 20 Aug 2014

See all articles by Marc Henry

Marc Henry

Pennsylvania State University

Ismael Mourifie

University of Toronto - Department of Economics

Multiple version iconThere are 2 versions of this paper

Date Written: May 22, 2012

Abstract

We derive the empirical content of an instrumental variables model of sectoral choice with discrete outcomes. The partial identification results extend existing work on sharp bounds in binary choice threshold crossing models in allowing sector specific unobserved heterogeneity. 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. The derived bounds are applied to the analysis of the effect of Swan-Ganz catheterization and the robustness of previous findings to the introduction of procedure-specific unobserved heterogeneity is examined.

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

JEL Classification: C21, C25, C26

Suggested Citation

Henry, Marc and Mourifie, Ismael, Sharp Bounds in the Binary Roy Model (May 22, 2012). Available at SSRN: https://ssrn.com/abstract=1986497 or http://dx.doi.org/10.2139/ssrn.1986497

Marc Henry (Contact Author)

Pennsylvania State University ( email )

University Park
State College, PA 16802
United States

Ismael Mourifie

University of Toronto - Department of Economics ( email )

150 St. George Street
Toronto, Ontario M5S3G7
Canada

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