Sample Selection and Heckman's Method | Estimation Methods | Stata Tutorials Topic 46

Stata Tutorials Topic 46: Sample Selection and Heckman's Method | Regression Analysis and Estimation Methods Using Stata Hi, I am Bob. We will explore sample selection today. We will learn how to follow Heckman's two-step procedure in Stata to alleviate the endogenous sample selection bias. Sample selection bias happens when the estimation sample cannot represent the entire population we are interested in. A classic example in econometrics textbooks is the women's wage equation. Please download the dataset for this topic: https://drive.google.com/file/d/1ZJDMq5mSGPbEm1hnbMpluCI5ub7Lk5iQ/view?usp=sharing #SampleSelection #heckman #twostep #SampleSelectionBias #endogenous #exogenous #Stata #RegressionAnalysisandEstimationMethods #tutorial The Stata commands in this video: *Open dataset use CPS91.dta, clear describe tabulate inlf *OLS regress lwage educ exper expersq black hispanic estimates store OLS *Heckman two-step procedure manually *Step1: Linear predictions from selection regression probit inlf educ exper expersq black hispanic nwifeinc kidlt6 predict inlfhat, xb generate lambdahat=normalden(inlfhat)/normal(inlfhat) *Step2: Include inverse Mills ratio in wage regression regress lwage educ exper expersq black hispanic lambdahat estimates store SSC1 esttab OLS SSC1, mtitles se star(* 0.1 ** 0.05 *** 0.01) b(%7.3f) compress *The heckman command heckman lwage educ exper expersq black hispanic, select(inlf=educ exper expersq black hispanic nwifeinc kidlt6) twostep mills(lambhat) estimates store SSC2 esttab OLS SSC1 SSC2, mtitles se star(* 0.1 ** 0.05 *** 0.01) b(%7.3f) compress summarize lambdahat lambhat *An equivalent method probit inlf educ exper expersq black hispanic nwifeinc kidlt6 predict inlfhat_pr, pr regress lwage educ exper expersq black hispanic inlfhat_pr estimates store SSC3 esttab OLS SSC1 SSC2 SSC3, mtitles se star(* 0.1 ** 0.05 *** 0.01) b(%7.3f) compress 【Some Free Courses on My YouTube Channel】 Economics in Real Life: https://youtube.com/playlist?list=PLVnZllyvIMyQWRM_U-tpNONlgj5PvKwIm Solutions to Introductory Econometrics A Modern Approach 7th Edition: https://youtube.com/playlist?list=PLVnZllyvIMyRA-F5k-kb0RbNXd_i8oXfT Solutions to Microeconomics Theory and Applications with Calculus: https://youtube.com/playlist?list=PLVnZllyvIMyRbgoiL-XAfepq79Q11VBU3 Introductory Stata: https://youtube.com/playlist?list=PLVnZllyvIMyT8elGqkiOJmQhVfc8P-1JR Introductory Microeconomics: https://youtube.com/playlist?list=PLVnZllyvIMyTnIaoPQZHglrjoY5OkYppk Five Minute Econometrics: https://youtube.com/playlist?list=PLVnZllyvIMyQ_PeOSDVJy5YkdYaLG5-YL Five Minute Stata: https://youtube.com/playlist?list=PLVnZllyvIMyTv3CpqsxnVfhwdlQli-hSL 【國語Mandarin】現實生活中的經濟學: https://youtube.com/playlist?list=PLVnZllyvIMyRibbK32SD9CV1QoidlaJ3f 【粵語Cantonese】現實生活中的經濟學: https://youtube.com/playlist?list=PLVnZllyvIMyTlreRu86Msrwis-6f9Unze 【粵語Cantonese】微觀經濟學基礎: https://youtube.com/playlist?list=PLVnZllyvIMyQg_qgMedWyR1_OXvkw6SAL 【國語Mandarin】五分鐘計量經濟學: https://youtube.com/playlist?list=PLVnZllyvIMyRfBL-1B1-q67gYkLUl8mJq 【粵語Cantonese】五分鐘計量經濟學: https://youtube.com/playlist?list=PLVnZllyvIMyQPhDLyiPECG1VfQoL8i3uq On the Road: https://youtube.com/playlist?list=PLVnZllyvIMyRqGfGNuJTA8W-7BdEG9jay 【Become a Supporter of the channel ($2.99) to get PDF transcripts for】 1. Solutions to Microeconomics Theory and Applications with Calculus 5th Edition, 2. Solutions to Introductory Econometrics A Modern Approach 7th Edition, 3. Introductory Stata (2022), 4. Introductory Microeconomics (2022), and 5. Introductory Stata: Summary Statistics and Data Management https://www.youtube.com/channel/UCQ-qJEqT-G_O8v5atXqF1Kg/join In addition to the videos on my YouTube channel, you can also learn Stata from my free Alison online courses. Introductory Stata: Summary Statistics and Data Management https://alison.com/course/introductory-stata-summary-statistics-and-data-management Introductory Stata: Graphics and Data Visualization https://alison.com/course/introductory-stata-2023-graphics-and-data-visualization