>Doesn't that assumption mean that the variable program just isn't part
>of equation 2?
Marteen,
If I argue that program does not directly affect y1, but does so via y2,
then you're right I should remove 'program' from equation 1 and estimate
(1) y1 = y2 + demog + family + state
(2) y2 = y1 + program + demog + family + z1 + z2
(3) program = parents_occ + demog + family + state
However, I still cannot avoid estimating a 3SLS model that is trying to
address two separate endogeneity issues and where one of the depvars is
binary.
Removing 'program' from (1) could allow me to split up the system into two
2SLS models - one that deals with program selection - (2) and (3)- and one
that deals with simultaneity - (1) and (2). Then I'd have to deal with
estimated regressors in a 2SLS setting.
Elda
-----Original Message-----
From: [email protected]
[mailto:[email protected]] On Behalf Of Maarten buis
Sent: Sunday, April 22, 2007 2:52 AM
To: [email protected]
Subject: Re: st: dealing with both simultaneity and self-selection in a
system
--- Elda Pema <[email protected]> wrote:
> I am trying to estimate the effect of a high school program on
> student outcomes. The equations of interest are:
>
> (1) y1 = y2 + program + demog + family + state
> (2) y2 = y1 + program + demog + family + z1 + z2
> (3) program = parents_occ + demog + family + state
>
>
> Where y1 and y2 are student outcomes; demog, family and state are
> various control variables, z1 and z2 are instrumental variables.
> In addition, the variable "program" is binary, and y2 is categorical
> and sequential (ordered).
>
> 1. I can plausibly argue that the program affects y1 via y2. I am not
> sure how to set up and estimate the system under this assumption, but
> I am thinking of splitting up the system and estimate (1) and (3)
> separately from (2) and (1) and somehow incorporate fitted values
> from one system into another (and adjust standard errors).
Doesn't that assumption mean that the variable program just isn't part
of equation 2?
-----------------------------------------
Maarten L. Buis
Department of Social Research Methodology
Vrije Universiteit Amsterdam
Boelelaan 1081
1081 HV Amsterdam
The Netherlands
visiting address:
Buitenveldertselaan 3 (Metropolitan), room Z434
+31 20 5986715
http://home.fsw.vu.nl/m.buis/
-----------------------------------------
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