Dear All
I am looking at the effect of the rural-urban wage
differential on
rural-urban migration. I am following the methodology
Renzo Conelli posted
some time ago:
I first estimate the probit (migration on its
dependent variables except the
wage differential).
Calculate the inverse mills ratio and then plug it in
the wage equations.
Estimate the wage equations and get predicted values
to calculate the wage
differential
Plug in the wage differential in the migration Probit
again.
My concern is this: Since the wage differential is
endogenous, should'nt a
simultaneous equation procedure be used. I am a bit
confused on how to
combine a ML methodology (probit) with a simultaneous
equation procedure
(say, reg3)
Any assistance will be appreciated.
Thanks
Rashid
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