Two-step Heckman Selection Model Research Articles

Analysing inequalities in access and household investment in market-based supplemental educational services in India: A case of post-compulsory school education in Haryana

ABSTRACT The paper, based on a primary survey, explores the inequalities in access and household investment on the market-based ‘supplemental educational services’ (SESs) in post-compulsory school education (i.e. secondary level of education) in Haryana, a northern state in India. We find that around 44% of students access SESs in secondary education in Haryana, and it varies considerably across socioeconomic groups such as class, caste and gender. Results from the two-step Heckman selection model suggest that access to and household investment in SESs is significantly determined by household factors and school characteristics. We also find that SESs in Haryana are not homogenous, vary widely in content delivery and private costs. Nearly 56% of the students (mainly from socio-economically underprivileged groups) attend the low-cost and low-quality private tuition centres, while their better-off counterparts attend the more organised medium- and high-cost tuition services, and this widens the already existing inequality in educational opportunities in the state. The study suggests to stringently regulate the flourishing commercial SESs market to minimise growing educational inequality in the state.

Financial Literacy and Payment Behaviour: Evidence from Payment Diary Survey Data

This paper examines the effect of financial literacy on payment behaviour. We use data from a payment diary and an online survey conducted in 2018 in Switzerland. We estimate a two-step Heckman selection model to separately assess payment instrument adoption and usage decisions. We analyse the payment instruments cash, debit card, credit card, prepaid credit card, contactless debit card, contactless credit card and mobile payment. We introduce a novel payment-related literacy index. The results suggest that financial literacy exerts no effect on payment instrument choice. Payment literacy is a stronger predictor of payment behaviour than financial literacy. Traditional and contactless debit and credit card adoption are positively associated with payment literacy. We show that literacy levels impact payment instrument adoption more than subsequent usage decisions.

English

This study analyzes the market potential of the underutilized indigenous Morama (Tylosema esculentum) products by determining the consumers’ preferences and willingness to pay. Simple random sampling was used to select 372 respondents to participate in the cross-sectional survey. Contingent valuation method was used to determine the customers’ willingness to pay and the two-step Heckman selection model was employed to analyze the factors that influence the willingness to pay for the different Morama products. The majority of the respondents were knowledgeable of Morama and its product; consequently 84% showed interest in purchasing products developed from Morama. About 90% were willing to purchase Morama oil whereas 87% were willing to purchase Morama butter at least twice a month and 82% would be willing to buy Morama snack bar at least three times a month. The results indicate that Morama products have the potential to penetrate the market and hence can be used to improve both the standard of living for rural communities and household food security and thus alleviate poverty. The mean willingness to pay for Morama oil and butter are comparable to the conventional product, indicating that these products have good market prospects and can compete and potentially substitute the current products if domesticated and commercialised. Key words: Morama, market prospects, willingness to pay, consumers’ preferences, two-step Heckman selection model, contingent valuation.  

Women on boards and CEO pay-performance link

PurposeThe purpose of this paper is to investigate the crucial question of whether gender diversity in boardroom is associated with CEO pay and CEO pay-performance link.Design/methodology/approachThe authors used the data of companies listed on the Pakistan Stock Exchange for a sample consisting of KSE-100 index companies for the period of five years. The authors used the ordinary least square regression technique to test the developed hypotheses. The authors also used the two-step Heckman selection model, two-stage least square regression and propensity score matching method to control the problem of endogeneity.FindingsThe authors find reliable evidence of a negative association between gender diversity and CEO pay and of board gender diversity’s strengthening the relationship between CEO pay and firm performance. The authors also find that women director are more effective in setting the optimal contract in non-family-owned firms and firms with dispersed ownership structure as compared to family-owned firms and firms with concentrated ownership structure. Moreover, results also reflect that the influence of board diversity on both CEO pay and CEO pay-performance link is stronger when gender diversity goes beyond tokenism.Practical implicationsThe findings have implications in terms of providing the basis for policy makers to accord the same level of importance to gender diversity in the boardroom as well as contributing to the current debate on the desirability of mandating or recommending gender diversity on boardrooms.Originality/valueThis study is among the few studies which investigate the moderating role of boardroom gender diversity on the CEO pay-performance link. In addition, this study contributes to the institutional theory by providing the empirical evidence that the effect boardroom gender diversity on CEO pay and CEO pay-performance link varies by type of ownership.

A Heckman selection model for the safety analysis of signalized intersections.

PurposeThe objective of this paper is to provide a new method for estimating crash rate and severity simultaneously.MethodsThis study explores a Heckman selection model of the crash rate and severity simultaneously at different levels and a two-step procedure is used to investigate the crash rate and severity levels. The first step uses a probit regression model to determine the sample selection process, and the second step develops a multiple regression model to simultaneously evaluate the crash rate and severity for slight injury/kill or serious injury (KSI), respectively. The model uses 555 observations from 262 signalized intersections in the Hong Kong metropolitan area, integrated with information on the traffic flow, geometric road design, road environment, traffic control and any crashes that occurred during two years.ResultsThe results of the proposed two-step Heckman selection model illustrate the necessity of different crash rates for different crash severity levels.ConclusionsA comparison with the existing approaches suggests that the Heckman selection model offers an efficient and convenient alternative method for evaluating the safety performance at signalized intersections.

Ivtreatreg: A Command for Fitting Binary Treatment Models with Heterogeneous Response to Treatment and Unobservable Selection

In this article, I present ivtreatreg, a command for fitting four different binary treatment models with and without heterogeneous average treatment effects under selection-on-unobservables (that is, treatment endogeneity). Depending on the model specified by the user, ivtreatreg provides consistent estimation of average treatment effects by using instrumental-variables estimators and a generalized two-step Heckman selection model. The added value of this new command is that it allows for generalization of the regression approach typically used in standard program evaluation by assuming heterogeneous response to treatment. It also serves as a sort of toolbox for conducting joint comparisons of different treatment methods, thus readily permitting checks on the robustness of results.

Labor Force Participation of Married Female: The Case of Russia

Women make up a little over half the world’s population, but their contribution to the labor force is far below its potential, with serious macroeconomic consequences. Despite a recent progress, labor markets across the globe remain divided along gender lines, and female LFP remains lower than the participation of their male counterparts. This paper assessed the determinants of labor force participation of married woman in Russia, using data obtained from Russian Longitudinal Monitoring Survey (RLMS) conducted in 2011 and 2012. The study used two-step Heckman selection model whose major function was to give unbiased estimators of the parameters of the wage function, which could serve to estimate parameters of a structural equation of participation.On the first stage, the consistent wage estimate for working and non-working segments of the sample is derived. On the second stage, the unbiased wage estimate is included to the main (structural) participation equation and the elasticities of different socio-demographic, economic and other individual characteristics are estimated. Two types of proxies (the presence of children and household income characteristics) that affect the married female’s opportunity cost of working but do not generate sample selection mechanisms were used in order to overcome the identification problem in the first-stage wage equation.The estimated semi-elasticity of married female participation to wage is about 0.24, which implies that for every one percent increase in offered wage, the LFP of women on average will grow by 0.24 percent in Russian Federation. The findings of the study also indicate that such factors as gender, age, the presence of dependent children, educational attainment, location and the religious affiliation are the significant determinants of the LFP of the married female in Russia. The income of the other household members and race of the respondent, on the other hand, proved to be insignificant determinants of labor supply. As a result, the empirical evidence provided by this project can be useful in future assessments of current social security and employment policies implemented in transition economies.

The effect of local and federal government website use on trust in government: an exploratory analysis

The objective of this paper is a closer examination of how information and communication technology (ICT) may influence consumer/citizen attitudes toward local and federal governments. This is accomplished through an exploratory analysis of how demographic variables affect local and federal government website use and their effect on trust in these levels of government. A survey of government website use was constructed utilising feedback from individuals experienced in using e-government websites. Analysis was based on a two-step Heckman selection model, including probit and generalised ordered logit models. It was found that gender, age, education, race, and income all can affect local government website use. This exploratory study contributes to a more detailed understanding of who uses the websites of the governments that most directly affect people's lives and whether e-government website use can lead to trust.

Estimating consumer preferences and willingness to pay for the underutilised indigenous chicken products

Indigenous chicken serves many functions, which include the provision of meat and eggs for home consumption and income from sales. The purpose of this study was to estimate the consumers’ responsiveness to an increase in prices of the indigenous chicken products and how much they are willing to pay for them in the market. The survey was conducted in the selected three regions of Kenya. A total of 930 respondents were interviewed both in the urban and rural areas. Contingent valuation experiment was used in empirical data collection. The two-step Heckman selection model was utilised to analyse consumers decisions and the amount they were willing to pay. The study results revealed that consumers are willing to pay 23.26% per kg more for indigenous chicken meat and 41.53% for eggs. Socioeconomic factors like age, income, education and family size significantly determines consumers’ willingness to pay. Other important factors include the indigenous chicken meat substitutes’ prices, attributes like taste/flavour and the product’s form on purchase. The yolk colour and size of eggs determined the consumers’ willingness to pay. Preferences for indigenous chicken products were found to be high. This information will assist in understanding both the urban and rural consumer’s behaviour. Therefore, useful for the indigenous chicken producers, breeders, marketers and policy makers in developing efficient production and marketing strategies. This would also provide a means of improving food security and livelihoods of the rural poor indigenous chicken farmers.

Determinants of Household Demand for Services - Formal Versus Informal Sector

This paper addresses the issue of household demand for services in Poland when informal sector is taken into consideration. The aim of the study is threefold: (i) to investigate the factors influencing households expenses for services, (ii) to find the determinants of households’ tax strategy (choice between acquiring services on regular labour market or not), (iii) to investigate the differences between the factors that influence the expenses for formal versus informal services. Two-step Heckman selection model is used to account for the selection into buying household services. Lee’s (1983) procedure is adopted to control for the selection into the particular choice of tax strategy when purchasing household services. The decision whether to buy household services and whether formally or informally is modelled as a sequential choice and estimated by bivariate probit with selection. An important novel feature of the model used is the inclusion of variables that capture social norms and personal attitudes toward tax evasion. The study concludes that factors influencing expenses for services are positively related to financial situation of households, education and age of household head. The probability of avoiding taxes is higher for lower income households, households with more than one member and for those where a positive attitude toward informal employment is expressed. The impact of determinants of expenses for formal and informal services separately is comparable. Only household structure has the opposite effect on expenses for formal services versus informal ones.