Dear Statalist Members,
I am trying to estimate labor force participation and work hour model using heckman's two step estimator. I do not have wage data and consequently I am relying on reduced from approach.
So far I have not used any exclusion restriction in the first stage probit probit model and consequently the entire identification strategy is based on the normality assumption of the error terms. Many economists argue to avoid such situation.
So I need a variable that effect labor force participation but not work hours. I find it difficult to identify such variable given the fact that labor force participation and work hours are derived from the same utility maximizing model.
Can any one suggest me of any such variable? Or should I drop Heckman method and look for other method for correcting selection bias? Which method?
Thanks,
John
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