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st: Re: probit and ordered probit eqns in a simultaneous system


From   Michael Alexander <Michael.Alexander@aifs.gov.au>
To   statalist@hsphsun2.harvard.edu
Subject   st: Re: probit and ordered probit eqns in a simultaneous system
Date   Tue, 11 Jul 2006 11:37:52 +1000

Hi

I posted this query to the list last week but unfortunately noone has had the opportunity to respond as yet. I am posting it again in case someone is now able to help. Or if my query is an inappropriate one for the list, perhaps someone can let me know.

Regards
Michael

Michael Alexander wrote:


Hi listreaders

I have a particular econometric problem that I am trying to analyse in Stata. I am trying to model employment of mothers (binary dependent variable) with the inclusion of self-reported health as an explanatory variable. I am postulating that self-reported health (a five-level categorical variable) is endogeous to employment. Following Cai and Kalb (2006) I am also postulating that labour force status is also a determinant of self-reported health (although this is of secondary importance to me).

Consequently, my modelling approach was to do a system of two equations (one for LFS and one for self-reported health) and estimate them simultaneously. Unfortunately, I have only found the -mvprobit- command which will sort of allow me to model this, but only if I convert my self-reported health variable to a binary variable. What I ideally need is a command that will allow me to simultaneously model a binary dependent variable (employment) and an ordinal categorical dependent variable (self-reported health, which has five-levels). Does such a command exist? Or am I able to build my own estimator ? (Not something I am keen on as I haven't done a lot of programming but am willing to give it a go if this is the only approach).

An alternative approach would be to not worry about the impact of LFS on self-reported health and only focus on the endogenous nature of self-reported health on employment. That way I could use an instrumental variable approach to dealing with the endogeniety of self-reported health in an employment equation. But as far as I can make out, this still requires me to model self-reported health as a binary variable (using -ivprobit-). Can I use an instrumental variable approach even when my endogeous variable is (ordinal) categorical.

Thanks in anticipation
Michael

Cai, L. and Kalb, K. (2006), 'Health Status and Labour Force Participation: Evidence from the HILDA Data', Health Economics, vol. 15, March, pp. 241-261.

--
Michael Alexander
Principal Research Fellow
Australian Institute of Family Studies

300 Queen Street Melbourne VIC 3000

Tel: 03 9214 7841
Fax: 03 9214 7839
Mob: 0419 406 078
Email: Michael.Alexander@aifs.gov.au
Web-site: www.aifs.gov.au

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