Dear Seema,
Verbeek(2000) argues that the selection equation should at least
contain all the variables the structural equation contains. however,
Linder and de Groot (2006) argue that the variables of the two parts
can be different.
the unique variable the selection process should contain is probably a
dummy which is used as the selection identifier. lets say you data for
workers, some work some are unemployed. then create a dummy whether
the worker has work or not and use this in the selection equation as
the identifier.
hope it helps
georg
On 8/29/07, Seema Bhatia <[email protected]> wrote:
> Dear All
>
> Are there any rules relating to the difference in the number of variables in
> the selection equation and the structural equation when estimating the two
> stage Heckman model?
>
> The stata help files do suggest that the selection equation must have
> atleast one variable that is not in the outcome equation - does this
> necessarily mean that the number of variables in the selection equation are
> always higher than in the outcome equation?
>
> Also, how does one verify that this 'identifying' variable that seperates
> the two equations is valid in the sense that it determines whether that case
> is selected or not but does not determine the LHS in the second step?
>
> Any insights would be much appreciated
>
> Many thanks
>
> Seema
>
>
>
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