Dear Lilach
Consider the classic example: you want to explain the wage of women. This is a case where you might expect self-selection, since a considerable proportion of women "choose" not to work. The wage is a continuous variable, but it is only observed when the woman works. The selection equation has one dependent variable, which is dichotomous: is the wage observed (1) or not (0), i.e. does the woman work or not. So the selection equation does not have a continuous dependent variable, but a dichotomous dependent variable indicating whether the case is selected or not.
Hope this helps,
Maarten
-----Original Message-----
From: [email protected] [mailto:[email protected]]On Behalf Of [email protected]
Sent: donderdag 6 oktober 2005 4:43
To: [email protected]
Subject: st: Heckman self selection bias - selection variable
I need to conduct Heckman style self-selection bias test.
For the first stage of this test, the selection probit model, I have a
number of alternative DVs, all of whom are continuous variables. Can I
dichotomize a continuous variable, so that it can be used as a DV in the
probit model?
Will appreciate very much any advice on this.
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