NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Nonparametric Identification and Estimation in a Generalized Roy Model

Patrick Bayer, Shakeeb Khan, Christopher Timmins

NBER Working Paper No. 13949
Issued in April 2008
NBER Program(s):   LS   TWP

This paper considers nonparametric identification and estimation of a generalized Roy model that includes a non-pecuniary component of utility associated with each choice alternative. Previous work has found that, without parametric restrictions or the availability of covariates, all of the useful content of a cross-sectional dataset is absorbed in a restrictive specification of Roy sorting behavior that imposes independence on wage draws. While this is true, we demonstrate that it is also possible to identify (under relatively innocuous assumptions and without the use of covariates) a common non-pecuniary component of utility associated with each choice alternative. We develop nonparametric estimators corresponding to two alternative assumptions under which we prove identification, derive asymptotic properties, and illustrate small sample properties with a series of Monte Carlo experiments. We demonstrate the usefulness of one of these estimators with an empirical application. Micro data from the 2000 Census are used to calculate the returns to a college education. If high-school and college graduates face different costs of migration, this would be reflected in different degrees of Roy-sorting-induced bias in their observed wage distributions. Correcting for this bias, the observed returns to a college degree are cut in half.

download in pdf format
   (484 K)

email paper

This paper is available as PDF (484 K) or via email.

Acknowledgments

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w13949

Users who downloaded this paper also downloaded these:
DeLeire and Timmins w14364 Roy Model Sorting and Non-Random Selection in the Valuation of a Statistical Life
Bayer, McMillan, Murphy, and Timmins w17250 A Dynamic Model of Demand for Houses and Neighborhoods
Shaikh and Vytlacil t0307 Threshold Crossing Models and Bounds on Treatment Effects: A Nonparametric Analysis
Bayer and McMillan w17364 Tiebout Sorting and Neighborhood Stratification
Kennan and Walker w9585 The Effect of Expected Income on Individual Migration Decisions
 
Publications
Activities
Meetings
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us