| By: |
Giles, John T. (World Bank);
Murtazashvili, Irina (Drexel University) |
| Abstract: |
This paper proposes a parametric approach to estimating a dynamic binary
response panel data model that allows for endogenous contemporaneous
regressors. Such a model is of particular value for settings in which one
wants to estimate the effects of an endogenous treatment on a binary outcome.
In order to demonstrate the usefulness of the approach, we use it to examine
the impact of rural-urban migration on the likelihood that households in rural
China fall below the poverty line. In this application, it is shown that
migration is important for reducing the likelihood that poor households remain
in poverty and that non-poor households fall into poverty. Furthermore, it is
demonstrated that failure to control for unobserved heterogeneity would lead
the researcher to underestimate the impact of migrant labor markets on
reducing the probability of falling into poverty. |
| Keywords: |
dynamic binary response models, control function approach, migration, poverty-persistence, rural China |
| JEL: |
C13 C33 O15 P25 |
| Date: |
2012–09 |
| URL: |
http://d.repec.org/n?u=RePEc:iza:izadps:dp6887&r=cna |