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Permanent URL to this publication: http://dx.doi.org/10.5167/uzh-51794

Staub, Kevin E (2010). A causal interpretation of extensive and intensive margin effects in generalized Tobit models. Working paper series / Socioeconomic Institute No. 1012, University of Zurich.

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Abstract

The usual decomposition of effects in corner solution models into extensive and intensive margins is generally incompatible with a causal interpretation. This paper proposes a decomposition based on the joint distribution of potential outcomes which is meaningful in a causal sense. The difference between decompositions can be substantial and yield diametrically opposed results, as shown in a standard Tobit model example. In a generalized Tobit application exploring the effect of reducing firm entry regulation on bilateral trade flows between countries, estimates suggest that using the usual decomposition would overstate the contribution of the extensive margin by around 15%.

Item Type:Working Paper
Communities & Collections:03 Faculty of Economics > Department of Economics
Working Paper Series > Socioeconomic Institute (former)
DDC:330 Economics
JEL Classification:C24, C34, F14
Language:English
Date:November 2010
Deposited On:29 Nov 2011 16:09
Last Modified:09 Jul 2012 07:00
Series Name:Working paper series / Socioeconomic Institute
Official URL:http://www.econ.uzh.ch/wp.html

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