TY - JOUR AU - Bayer,Patrick AU - Khan,Shakeeb AU - Timmins,Christopher TI - Nonparametric Identification and Estimation in a Generalized Roy Model JF - National Bureau of Economic Research Working Paper Series VL - No. 13949 PY - 2008 Y2 - April 2008 UR - http://www.nber.org/papers/w13949 L1 - http://www.nber.org/papers/w13949.pdf N1 - Author contact info: Patrick Bayer Department of Economics Duke University 213 Social Sciences Durham, NC 27708 Tel: 919/660-1832 E-Mail: patrick.bayer@duke.edu Shakeeb Khan Department of Economics Duke University 213 Social Sciences Durham, NC 27708 E-Mail: shakeeb.khan@duke.edu Christopher Timmins Department of Economics Duke University 209 Social Sciences Building P.O. Box 90097 Durham, NC 27708-0097 Tel: 919/660-1809 Fax: 919/684-8974 E-Mail: christopher.timmins@duke.edu AB - 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. ER -