A Control Function Approach to Estimating Dynamic Probit Models with Endogenous Regressors, with an Application to the Study of Poverty Persistence in China

This paper proposes a parametric approach to estimating a dynamic binary response panel data model that allows for endogenous contemporaneous regressors. This approach is of particular value for settings in which one wants to estimate the effects o...

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Main Authors:	Giles, John, Murtazashvili, Irina
Format:	Policy Research Working Paper
Language:	English
Published:	2012
Subjects:	ABSOLUTE VALUE AGRICULTURAL POLICY ASYMMETRIC INFORMATION CONSUMER PRICE INDEX CONSUMPTION GROWTH COVARIANCE MATRIX CULTURAL CHANGE CURRENT POVERTY DEPENDENT VARIABLE DERIVATIVES DETERMINANTS OF POVERTY DEVELOPED WORLD DEVELOPING COUNTRIES DEVELOPING WORLD DEVELOPMENT ECONOMICS DEVELOPMENT RESEARCH DUMMY VARIABLE DUMMY VARIABLES DURABLE DURABLE GOODS DURABLES DYNAMIC PANEL ECONOMIC ACTIVITY ECONOMIC DEVELOPMENT ECONOMIC POLICY ECONOMIC STUDIES ECONOMIC TRANSITION ECONOMICS ECONOMICS LETTERS EDUCATIONAL ATTAINMENT EMPIRICAL APPLICATION EMPIRICAL EVIDENCE EMPIRICAL STUDIES EMPLOYMENT OPPORTUNITIES ERROR TERM ESTIMATES OF POVERTY ESTIMATION RESULTS EXPENDITURE EXPENDITURES EXPLANATORY VARIABLES FARM EMPLOYMENT FARMERS FINANCIAL SUPPORT GEOGRAPHIC POVERTY TRAPS GROWTH RATE HOUSEHOLD COMPOSITION HOUSEHOLD CONSUMPTION HOUSEHOLD CONSUMPTION PER CAPITA HOUSEHOLD INCOME HOUSEHOLD POVERTY HOUSEHOLD SIZE HOUSEHOLD SURVEY HOUSEHOLD SURVEYS HOUSING HUMAN CAPITAL HUMAN DEVELOPMENT HUMAN RESOURCES IMPACT OF MIGRATION IMPACT ON POVERTY IMPACT ON POVERTY REDUCTION INCOME INCOME INEQUALITY INDICATORS OF POVERTY INEQUALITY INSTRUMENT INSURANCE INSURANCE MARKETS INTERNATIONAL BANK INVESTMENT DECISIONS LABOR FORCE LABOR MARKET LABOR MARKETS LABOR SUPPLY LAGGED DEPENDENT LAND HOLDINGS LOCAL ECONOMY MACROECONOMIC SHOCKS MARRIED WOMEN MEAN VALUE MICRO MODEL MIGRANT MIGRANT LABOR NEGATIVE SHOCKS NON-POOR HOUSEHOLDS NORMAL DISTRIBUTION 0 HYPOTHESIS NUMBER OF HOUSEHOLDS NUMBER OF MIGRANTS NUTRITION PERSISTENT POVERTY POLICY CHANGES POLICY DECISIONS POLICY RESEARCH POLICY RESEARCH WORKING PAPER POLITICAL ECONOMY POOR POOR HOUSEHOLDS POPULATION AND DEVELOPMENT POPULATION CENSUS POST-REFORM POVERTY ALLEVIATION POVERTY LINE POVERTY PERSISTENCE POVERTY REDUCTION POVERTY STATUS PROGRESS PROPERTY RIGHTS PUBLIC SERVICES QUALITATIVE DATA RAPID GROWTH REDUCED FORM EQUATION REGISTRATION SYSTEM REMITTANCES REMOTE REGIONS RESIDENCE STATUS RESPECT RETURN RETURNS RURAL RURAL COMMUNITIES RURAL CONSUMER RURAL COUNTIES RURAL ECONOMY RURAL HOUSEHOLD RURAL HOUSEHOLDS RURAL LABOR RURAL LIVING STANDARDS RURAL MIGRANTS RURAL MIGRATION RURAL RESIDENTS RURAL VILLAGES SAVINGS SERIAL CORRELATION SOCIAL NETWORKS STATE UNIVERSITY UNEMPLOYMENT URBAN AREAS URBAN MIGRATION VALUATION VILLAGE LEADERS VILLAGE LEVEL WORKFORCE
Online Access:	http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20100813140147 http://hdl.handle.net/10986/3884

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spelling	okr-10986-38842021-04-23T14:02:13Z A Control Function Approach to Estimating Dynamic Probit Models with Endogenous Regressors, with an Application to the Study of Poverty Persistence in China Giles, John Murtazashvili, Irina ABSOLUTE VALUE AGRICULTURAL POLICY ASYMMETRIC INFORMATION CONSUMER PRICE INDEX CONSUMPTION GROWTH COVARIANCE MATRIX CULTURAL CHANGE CURRENT POVERTY DEPENDENT VARIABLE DERIVATIVES DETERMINANTS OF POVERTY DEVELOPED WORLD DEVELOPING COUNTRIES DEVELOPING WORLD DEVELOPMENT ECONOMICS DEVELOPMENT RESEARCH DUMMY VARIABLE DUMMY VARIABLES DURABLE DURABLE GOODS DURABLES DYNAMIC PANEL ECONOMIC ACTIVITY ECONOMIC DEVELOPMENT ECONOMIC POLICY ECONOMIC STUDIES ECONOMIC TRANSITION ECONOMICS ECONOMICS LETTERS EDUCATIONAL ATTAINMENT EMPIRICAL APPLICATION EMPIRICAL EVIDENCE EMPIRICAL STUDIES EMPLOYMENT OPPORTUNITIES ERROR TERM ESTIMATES OF POVERTY ESTIMATION RESULTS EXPENDITURE EXPENDITURES EXPLANATORY VARIABLES FARM EMPLOYMENT FARMERS FINANCIAL SUPPORT GEOGRAPHIC POVERTY TRAPS GROWTH RATE HOUSEHOLD COMPOSITION HOUSEHOLD CONSUMPTION HOUSEHOLD CONSUMPTION PER CAPITA HOUSEHOLD INCOME HOUSEHOLD POVERTY HOUSEHOLD SIZE HOUSEHOLD SURVEY HOUSEHOLD SURVEYS HOUSING HUMAN CAPITAL HUMAN DEVELOPMENT HUMAN RESOURCES IMPACT OF MIGRATION IMPACT ON POVERTY IMPACT ON POVERTY REDUCTION INCOME INCOME INEQUALITY INDICATORS OF POVERTY INEQUALITY INSTRUMENT INSURANCE INSURANCE MARKETS INTERNATIONAL BANK INVESTMENT DECISIONS LABOR FORCE LABOR MARKET LABOR MARKETS LABOR SUPPLY LAGGED DEPENDENT LAND HOLDINGS LOCAL ECONOMY MACROECONOMIC SHOCKS MARRIED WOMEN MEAN VALUE MICRO MODEL MIGRANT MIGRANT LABOR NEGATIVE SHOCKS NON-POOR HOUSEHOLDS NORMAL DISTRIBUTION 0 HYPOTHESIS NUMBER OF HOUSEHOLDS NUMBER OF MIGRANTS NUTRITION PERSISTENT POVERTY POLICY CHANGES POLICY DECISIONS POLICY RESEARCH POLICY RESEARCH WORKING PAPER POLITICAL ECONOMY POOR POOR HOUSEHOLDS POPULATION AND DEVELOPMENT POPULATION CENSUS POST-REFORM POVERTY ALLEVIATION POVERTY LINE POVERTY PERSISTENCE POVERTY REDUCTION POVERTY STATUS PROGRESS PROPERTY RIGHTS PUBLIC SERVICES QUALITATIVE DATA RAPID GROWTH REDUCED FORM EQUATION REGISTRATION SYSTEM REMITTANCES REMOTE REGIONS RESIDENCE STATUS RESPECT RETURN RETURNS RURAL RURAL COMMUNITIES RURAL CONSUMER RURAL COUNTIES RURAL ECONOMY RURAL HOUSEHOLD RURAL HOUSEHOLDS RURAL LABOR RURAL LIVING STANDARDS RURAL MIGRANTS RURAL MIGRATION RURAL RESIDENTS RURAL VILLAGES SAVINGS SERIAL CORRELATION SOCIAL NETWORKS STATE UNIVERSITY UNEMPLOYMENT URBAN AREAS URBAN MIGRATION VALUATION VILLAGE LEADERS VILLAGE LEVEL WORKFORCE This paper proposes a parametric approach to estimating a dynamic binary response panel data model that allows for endogenous contemporaneous regressors. This approach is of particular value for settings in which one wants to estimate the effects of an endogenous treatment on a binary outcome. The model is next used to examine the impact of rural-urban migration on the likelihood that households in rural China fall below the poverty line. In this application, it is shown that migration is important for reducing the likelihood that poor households remain in poverty and that non-poor households fall into poverty. Furthermore, it is demonstrated that failure to control for unobserved heterogeneity would lead the researcher to underestimate the impact of migrant labor markets on reducing the probability of falling into poverty. 2012-03-19T18:41:32Z 2012-03-19T18:41:32Z 2010-08-01 http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20100813140147 http://hdl.handle.net/10986/3884 English Policy Research working paper ; no. WPS 5400 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank Publications & Research :: Policy Research Working Paper East Asia and Pacific East Asia and Pacific East Asia Asia China
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English
topic	ABSOLUTE VALUE AGRICULTURAL POLICY ASYMMETRIC INFORMATION CONSUMER PRICE INDEX CONSUMPTION GROWTH COVARIANCE MATRIX CULTURAL CHANGE CURRENT POVERTY DEPENDENT VARIABLE DERIVATIVES DETERMINANTS OF POVERTY DEVELOPED WORLD DEVELOPING COUNTRIES DEVELOPING WORLD DEVELOPMENT ECONOMICS DEVELOPMENT RESEARCH DUMMY VARIABLE DUMMY VARIABLES DURABLE DURABLE GOODS DURABLES DYNAMIC PANEL ECONOMIC ACTIVITY ECONOMIC DEVELOPMENT ECONOMIC POLICY ECONOMIC STUDIES ECONOMIC TRANSITION ECONOMICS ECONOMICS LETTERS EDUCATIONAL ATTAINMENT EMPIRICAL APPLICATION EMPIRICAL EVIDENCE EMPIRICAL STUDIES EMPLOYMENT OPPORTUNITIES ERROR TERM ESTIMATES OF POVERTY ESTIMATION RESULTS EXPENDITURE EXPENDITURES EXPLANATORY VARIABLES FARM EMPLOYMENT FARMERS FINANCIAL SUPPORT GEOGRAPHIC POVERTY TRAPS GROWTH RATE HOUSEHOLD COMPOSITION HOUSEHOLD CONSUMPTION HOUSEHOLD CONSUMPTION PER CAPITA HOUSEHOLD INCOME HOUSEHOLD POVERTY HOUSEHOLD SIZE HOUSEHOLD SURVEY HOUSEHOLD SURVEYS HOUSING HUMAN CAPITAL HUMAN DEVELOPMENT HUMAN RESOURCES IMPACT OF MIGRATION IMPACT ON POVERTY IMPACT ON POVERTY REDUCTION INCOME INCOME INEQUALITY INDICATORS OF POVERTY INEQUALITY INSTRUMENT INSURANCE INSURANCE MARKETS INTERNATIONAL BANK INVESTMENT DECISIONS LABOR FORCE LABOR MARKET LABOR MARKETS LABOR SUPPLY LAGGED DEPENDENT LAND HOLDINGS LOCAL ECONOMY MACROECONOMIC SHOCKS MARRIED WOMEN MEAN VALUE MICRO MODEL MIGRANT MIGRANT LABOR NEGATIVE SHOCKS NON-POOR HOUSEHOLDS NORMAL DISTRIBUTION 0 HYPOTHESIS NUMBER OF HOUSEHOLDS NUMBER OF MIGRANTS NUTRITION PERSISTENT POVERTY POLICY CHANGES POLICY DECISIONS POLICY RESEARCH POLICY RESEARCH WORKING PAPER POLITICAL ECONOMY POOR POOR HOUSEHOLDS POPULATION AND DEVELOPMENT POPULATION CENSUS POST-REFORM POVERTY ALLEVIATION POVERTY LINE POVERTY PERSISTENCE POVERTY REDUCTION POVERTY STATUS PROGRESS PROPERTY RIGHTS PUBLIC SERVICES QUALITATIVE DATA RAPID GROWTH REDUCED FORM EQUATION REGISTRATION SYSTEM REMITTANCES REMOTE REGIONS RESIDENCE STATUS RESPECT RETURN RETURNS RURAL RURAL COMMUNITIES RURAL CONSUMER RURAL COUNTIES RURAL ECONOMY RURAL HOUSEHOLD RURAL HOUSEHOLDS RURAL LABOR RURAL LIVING STANDARDS RURAL MIGRANTS RURAL MIGRATION RURAL RESIDENTS RURAL VILLAGES SAVINGS SERIAL CORRELATION SOCIAL NETWORKS STATE UNIVERSITY UNEMPLOYMENT URBAN AREAS URBAN MIGRATION VALUATION VILLAGE LEADERS VILLAGE LEVEL WORKFORCE
spellingShingle	ABSOLUTE VALUE AGRICULTURAL POLICY ASYMMETRIC INFORMATION CONSUMER PRICE INDEX CONSUMPTION GROWTH COVARIANCE MATRIX CULTURAL CHANGE CURRENT POVERTY DEPENDENT VARIABLE DERIVATIVES DETERMINANTS OF POVERTY DEVELOPED WORLD DEVELOPING COUNTRIES DEVELOPING WORLD DEVELOPMENT ECONOMICS DEVELOPMENT RESEARCH DUMMY VARIABLE DUMMY VARIABLES DURABLE DURABLE GOODS DURABLES DYNAMIC PANEL ECONOMIC ACTIVITY ECONOMIC DEVELOPMENT ECONOMIC POLICY ECONOMIC STUDIES ECONOMIC TRANSITION ECONOMICS ECONOMICS LETTERS EDUCATIONAL ATTAINMENT EMPIRICAL APPLICATION EMPIRICAL EVIDENCE EMPIRICAL STUDIES EMPLOYMENT OPPORTUNITIES ERROR TERM ESTIMATES OF POVERTY ESTIMATION RESULTS EXPENDITURE EXPENDITURES EXPLANATORY VARIABLES FARM EMPLOYMENT FARMERS FINANCIAL SUPPORT GEOGRAPHIC POVERTY TRAPS GROWTH RATE HOUSEHOLD COMPOSITION HOUSEHOLD CONSUMPTION HOUSEHOLD CONSUMPTION PER CAPITA HOUSEHOLD INCOME HOUSEHOLD POVERTY HOUSEHOLD SIZE HOUSEHOLD SURVEY HOUSEHOLD SURVEYS HOUSING HUMAN CAPITAL HUMAN DEVELOPMENT HUMAN RESOURCES IMPACT OF MIGRATION IMPACT ON POVERTY IMPACT ON POVERTY REDUCTION INCOME INCOME INEQUALITY INDICATORS OF POVERTY INEQUALITY INSTRUMENT INSURANCE INSURANCE MARKETS INTERNATIONAL BANK INVESTMENT DECISIONS LABOR FORCE LABOR MARKET LABOR MARKETS LABOR SUPPLY LAGGED DEPENDENT LAND HOLDINGS LOCAL ECONOMY MACROECONOMIC SHOCKS MARRIED WOMEN MEAN VALUE MICRO MODEL MIGRANT MIGRANT LABOR NEGATIVE SHOCKS NON-POOR HOUSEHOLDS NORMAL DISTRIBUTION 0 HYPOTHESIS NUMBER OF HOUSEHOLDS NUMBER OF MIGRANTS NUTRITION PERSISTENT POVERTY POLICY CHANGES POLICY DECISIONS POLICY RESEARCH POLICY RESEARCH WORKING PAPER POLITICAL ECONOMY POOR POOR HOUSEHOLDS POPULATION AND DEVELOPMENT POPULATION CENSUS POST-REFORM POVERTY ALLEVIATION POVERTY LINE POVERTY PERSISTENCE POVERTY REDUCTION POVERTY STATUS PROGRESS PROPERTY RIGHTS PUBLIC SERVICES QUALITATIVE DATA RAPID GROWTH REDUCED FORM EQUATION REGISTRATION SYSTEM REMITTANCES REMOTE REGIONS RESIDENCE STATUS RESPECT RETURN RETURNS RURAL RURAL COMMUNITIES RURAL CONSUMER RURAL COUNTIES RURAL ECONOMY RURAL HOUSEHOLD RURAL HOUSEHOLDS RURAL LABOR RURAL LIVING STANDARDS RURAL MIGRANTS RURAL MIGRATION RURAL RESIDENTS RURAL VILLAGES SAVINGS SERIAL CORRELATION SOCIAL NETWORKS STATE UNIVERSITY UNEMPLOYMENT URBAN AREAS URBAN MIGRATION VALUATION VILLAGE LEADERS VILLAGE LEVEL WORKFORCE Giles, John Murtazashvili, Irina A Control Function Approach to Estimating Dynamic Probit Models with Endogenous Regressors, with an Application to the Study of Poverty Persistence in China
geographic_facet	East Asia and Pacific East Asia and Pacific East Asia Asia China
relation	Policy Research working paper ; no. WPS 5400
description	This paper proposes a parametric approach to estimating a dynamic binary response panel data model that allows for endogenous contemporaneous regressors. This approach is of particular value for settings in which one wants to estimate the effects of an endogenous treatment on a binary outcome. The model is next used to examine the impact of rural-urban migration on the likelihood that households in rural China fall below the poverty line. In this application, it is shown that migration is important for reducing the likelihood that poor households remain in poverty and that non-poor households fall into poverty. Furthermore, it is demonstrated that failure to control for unobserved heterogeneity would lead the researcher to underestimate the impact of migrant labor markets on reducing the probability of falling into poverty.
format	Publications & Research :: Policy Research Working Paper
author	Giles, John Murtazashvili, Irina
author_facet	Giles, John Murtazashvili, Irina
author_sort	Giles, John
title	A Control Function Approach to Estimating Dynamic Probit Models with Endogenous Regressors, with an Application to the Study of Poverty Persistence in China
title_short	A Control Function Approach to Estimating Dynamic Probit Models with Endogenous Regressors, with an Application to the Study of Poverty Persistence in China
title_full	A Control Function Approach to Estimating Dynamic Probit Models with Endogenous Regressors, with an Application to the Study of Poverty Persistence in China
title_fullStr	A Control Function Approach to Estimating Dynamic Probit Models with Endogenous Regressors, with an Application to the Study of Poverty Persistence in China
title_full_unstemmed	A Control Function Approach to Estimating Dynamic Probit Models with Endogenous Regressors, with an Application to the Study of Poverty Persistence in China
title_sort	control function approach to estimating dynamic probit models with endogenous regressors, with an application to the study of poverty persistence in china
publishDate	2012
url	http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20100813140147 http://hdl.handle.net/10986/3884
_version_	1764388836203298816

A Control Function Approach to Estimating Dynamic Probit Models with Endogenous Regressors, with an Application to the Study of Poverty Persistence in China

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