Simultaneity in binary outcome models with an application to employment for couples

Bo E. Honoré, Luojia Hu, Ekaterini Kyriazidou, Martin Weidner

Research output: Contribution to journalArticlepeer-review

Abstract

Two of Peter Schmidt’s many contributions to econometrics have been to introduce a simultaneous logit model for bivariate binary outcomes and to study estimation of dynamic linear fixed effects panel data models using short panels. In this paper, we study a dynamic panel data version of the bivariate model introduced in Schmidt and Strauss (Econometrica 43:745–755, 1975) that allows for lagged dependent variables and fixed effects as in Ahn and Schmidt (J Econom 68:5–27, 1995). We combine a conditional likelihood approach with a method of moments approach to obtain an estimation strategy for the resulting model. We apply this estimation strategy to a simple model for the intra-household relationship in employment. Our main conclusion is that the within-household dependence in employment differs significantly by the ethnicity composition of the couple even after one allows for unobserved household specific heterogeneity.

Original languageEnglish (US)
Pages (from-to)3197-3233
Number of pages37
JournalEmpirical Economics
Volume64
Issue number6
DOIs
StatePublished - Jun 2023

All Science Journal Classification (ASJC) codes

  • Economics and Econometrics
  • Mathematics (miscellaneous)
  • Statistics and Probability
  • Social Sciences (miscellaneous)

Keywords

  • Binary response
  • Employment
  • Fixed effects
  • Moment conditions
  • Simultaneity

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