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Roy model

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126:. Borjas then uses the implications of the Roy model to infer something about what wages for immigrants in country 1 would have been had they stayed in country 0 and what wages for non-immigrants in country 0 would have been had they migrated. The third, and final, element needed for this is the correlation between the wages in the two countries, 40:
in the original paper is whether the best hunters will hunt, and the best fishermen will fish. While the discussion is non-mathematical, it is observed that choices will depend on the distribution of skills, the correlation between these skills in the population, and the technology available to use these skills.
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Roy's original paper deals with workers selecting into fishing and hunting professions, where there is no uncertainty about the amount of goods (fish or rabbits) that will be caught in a given period, but fishing is more costly as it requires more skill. The central question that Roy tries to answer
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Heckman, J. J.; Vytlacil, E. (2007). "Econometric evaluation of social programs, part I: Causal models, structural models and econometric policy evaluation". In Heckman, J. J.; Leamer, E. E. (eds.).
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is the standard normal cdf. This leads to the famous central result that the expected wage for immigrants depends on the selection mechanism, as shown in equation (1), where
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While Borjas was the first to mathematically formalize the Roy model, it has guided thinking in other fields of research as well. A famous example by
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procedure. More generally, Heckman and Vytlacil propose the Roy model as an alternative to the LATE framework proposed by
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associated with migrating from country 0 to country 1 and workers know all parameters and their own realization of e
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was the first to formalize the model of Roy in a mathematical sense and apply it to self-selection in
24: 55:. Specifically, assume source country 0 and destination country 1, with log earnings in a country 660: 652: 595: 560: 533: 486: 83: 31:. The basic model considers two types of workers that choose occupation in one of two sectors. 644: 587: 525: 529: 490: 678: 664: 474: 48: 494: 478: 462:{\displaystyle E=a_{0}+\rho s_{0}\left({\frac {\phi ({v})}{1-\phi ({v})}}\right)} 578:
Heckman, J. J.; Honoré, B. E. (1990). "The Empirical Content of the Roy Model".
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Borjas, G. J. (1987). "Self-Selection and the Earnings of Immigrants".
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Roy, A. (1951). "Some Thoughts on the Distribution of Earnings".
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using the Roy model, where the choice equation leads to the
328: 222: 136: 86: 282:{\displaystyle {\frac {-(a_{1}-a_{0}-{C})}{s_{v}}}} 461: 281: 200: 104: 201:{\displaystyle a_{1}-a_{0}-C+e_{1}-e_{0}>0} 315:is the standard normal pdf and, like before, 23:is one of the earliest works in economics on 8: 444: 422: 413: 403: 387: 348: 339: 327: 271: 258: 249: 236: 223: 221: 186: 173: 154: 141: 135: 96: 91: 85: 506: 130:. A worker will choose to immigrate if 114:. Additionally, assume there is a cost 628:Imbens, G. W.; Angrist, J. D. (1994). 16:Model for self-selection in economics 7: 208:which will happen with probability 530:10.1093/oxfordjournals.oep.a041827 373: 370: 367: 364: 361: 358: 355: 352: 349: 14: 449: 441: 427: 419: 377: 332: 263: 229: 1: 617:. Vol. 6. North Holland. 296:is the standard deviation of 319:is the standard normal cdf: 701: 483:labor market participation 105:{\displaystyle s_{i}^{2}} 615:Handbook of Econometrics 553:American Economic Review 517:Oxford Economic Papers 463: 283: 202: 106: 464: 284: 203: 107: 326: 220: 134: 84: 44:Further developments 101: 487:Heckman correction 459: 279: 198: 102: 87: 453: 277: 692: 685:Economics models 669: 668: 634: 625: 619: 618: 610: 604: 603: 586:(5): 1121–1149. 575: 569: 568: 548: 542: 541: 511: 468: 466: 465: 460: 458: 454: 452: 448: 430: 426: 414: 408: 407: 392: 391: 376: 344: 343: 288: 286: 285: 280: 278: 276: 275: 266: 262: 254: 253: 241: 240: 224: 207: 205: 204: 199: 191: 190: 178: 177: 159: 158: 146: 145: 111: 109: 108: 103: 100: 95: 700: 699: 695: 694: 693: 691: 690: 689: 675: 674: 673: 672: 649:10.2307/2951620 632: 627: 626: 622: 612: 611: 607: 592:10.2307/2938303 577: 576: 572: 550: 549: 545: 513: 512: 508: 503: 431: 415: 409: 399: 383: 335: 324: 323: 305: 301: 294: 267: 245: 232: 225: 218: 217: 182: 169: 150: 137: 132: 131: 125: 121: 82: 81: 79: 72: 68: 64: 46: 37: 17: 12: 11: 5: 698: 696: 688: 687: 677: 676: 671: 670: 643:(2): 467–475. 620: 605: 570: 559:(4): 531–553. 543: 524:(2): 135–146. 505: 504: 502: 499: 491:Joshua Angrist 471: 470: 457: 451: 447: 443: 440: 437: 434: 429: 425: 421: 418: 412: 406: 402: 398: 395: 390: 386: 382: 379: 375: 372: 369: 366: 363: 360: 357: 354: 351: 347: 342: 338: 334: 331: 303: 299: 292: 274: 270: 265: 261: 257: 252: 248: 244: 239: 235: 231: 228: 197: 194: 189: 185: 181: 176: 172: 168: 165: 162: 157: 153: 149: 144: 140: 123: 119: 99: 94: 90: 77: 70: 66: 62: 45: 42: 36: 35:Original model 33: 25:self-selection 15: 13: 10: 9: 6: 4: 3: 2: 697: 686: 683: 682: 680: 666: 662: 658: 654: 650: 646: 642: 638: 631: 624: 621: 616: 609: 606: 601: 597: 593: 589: 585: 581: 574: 571: 566: 562: 558: 554: 547: 544: 539: 535: 531: 527: 523: 519: 518: 510: 507: 500: 498: 496: 492: 488: 484: 480: 476: 475:James Heckman 455: 445: 438: 435: 432: 423: 416: 410: 404: 400: 396: 393: 388: 384: 380: 345: 340: 336: 329: 322: 321: 320: 318: 314: 310: 306: 295: 272: 268: 259: 255: 250: 246: 242: 237: 233: 226: 215: 211: 195: 192: 187: 183: 179: 174: 170: 166: 163: 160: 155: 151: 147: 142: 138: 129: 117: 113: 97: 92: 88: 73: 58: 54: 50: 49:George Borjas 43: 41: 34: 32: 30: 26: 22: 640: 637:Econometrica 636: 623: 614: 608: 583: 580:Econometrica 579: 573: 556: 552: 546: 521: 515: 509: 495:Guido Imbens 472: 316: 312: 308: 297: 290: 213: 209: 127: 115: 75: 60: 56: 47: 38: 20: 18: 53:immigration 501:References 481:who study 665:153123153 479:Bo Honoré 439:ϕ 436:− 417:ϕ 397:ρ 346:∣ 256:− 243:− 227:− 180:− 161:− 148:− 59:given by 29:A. D. Roy 21:Roy model 679:Category 74:, where 657:2951620 600:2938303 565:1814529 538:2662082 307:, and 27:due to 663:  655:  598:  563:  536:  212:where 210:1-Φ(v) 80:~N(0, 661:S2CID 653:JSTOR 633:(PDF) 596:JSTOR 561:JSTOR 534:JSTOR 122:and e 493:and 477:and 193:> 19:The 645:doi 588:doi 526:doi 469:(1) 302:– e 216:is 69:+ e 65:= a 681:: 659:. 651:. 641:62 639:. 635:. 594:. 584:58 582:. 557:77 555:. 532:. 520:. 497:. 289:, 667:. 647:: 602:. 590:: 567:. 540:. 528:: 522:3 456:) 450:) 446:v 442:( 433:1 428:) 424:v 420:( 411:( 405:0 401:s 394:+ 389:0 385:a 381:= 378:] 374:e 371:t 368:a 365:r 362:g 359:i 356:m 353:m 350:I 341:0 337:w 333:[ 330:E 317:Φ 313:ϕ 309:Φ 304:0 300:1 298:e 293:v 291:s 273:v 269:s 264:) 260:C 251:0 247:a 238:1 234:a 230:( 214:v 196:0 188:0 184:e 175:1 171:e 167:+ 164:C 156:0 152:a 143:1 139:a 128:ρ 124:1 120:0 116:C 112:) 98:2 93:i 89:s 78:i 76:e 71:i 67:i 63:i 61:w 57:i

Index

self-selection
A. D. Roy
George Borjas
immigration
James Heckman
Bo Honoré
labor market participation
Heckman correction
Joshua Angrist
Guido Imbens
Oxford Economic Papers
doi
10.1093/oxfordjournals.oep.a041827
JSTOR
2662082
JSTOR
1814529
doi
10.2307/2938303
JSTOR
2938303
"Identification and Estimation of Local Average Treatment Effects"
doi
10.2307/2951620
JSTOR
2951620
S2CID
153123153
Category
Economics models

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