I am searching for a method on how to do the selection into employment with panel data, so that in the second step I can estimate the wages and total hours worked of the employees. I found that some people use rather simple estimations. One of them estimates a Heckman selection and then sets the data to stset, similar to probit working indepbvar predict selection,xb tsset id_ind wave tsreg lnwage indepvar selection Another one used the standard cross-sectional Mills ratio formular for panel data, similar to this: xtprobit working indepvar /* or xtlogit*/ predict p1, xb /* from UCLA doc generate phi = (1/sqrt(2*_pi))*exp(-(p1^2/2)) /*standardize it*/ generate capphi = norm(p1) generate invmills = phi/capphi xtreg lnwage indepvar invmills Are either of these methods theretically sound?
I am searching for a method on how to do the selection into employment with panel data, so that in the second step I can estimate the wages and total hours worked of the employees. I found that some people use rather simple estimations. One of them estimates a Heckman selection and then sets the data to stset, similar to probit working indepbvar predict selection,xb tsset id_ind wave tsreg lnwage indepvar selection Another one used the standard cross-sectional Mills ratio formular for panel data, similar to this: xtprobit working indepvar /* or xtlogit*/ predict p1, xb /* from UCLA doc generate phi = (1/sqrt(2*_pi))*exp(-(p1^2/2)) /*standardize it*/ generate capphi = norm(p1) generate invmills = phi/capphi xtreg lnwage indepvar invmills Are either of these methods theretically sound?