Hi statalisters,
I am estimating a bivariate probit for a two-stage process in which the second event is observed conditional on the outcome of the first one (the first event is leaving the workforce (left) and the second event is returning to the workforce (ret). So, return only happens if the person left the workforce).
I understand i have to use a biprobit model with partial observability.
Getting some help from stata faqs i have done so far:
replace ret=0 if left=0
gen leftret= left*ret so leftret=1 only when left=1 and ret=1, 0 otherwise.
gen y2=leftret.
biprobit leftret y2 x1 x2...., partial
but the likelihood function never converges (it is not concave) in all the iterations.
Your help is greatly appreciated.
Celia P.
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