Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/76127
Authors: 
Staub, Kevin E.
Year of Publication: 
2010
Series/Report no.: 
Working Paper, Socioeconomic Institute, University of Zurich 1012
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%.
Subjects: 
limited dependent variables
potential outcomes
causality
conditional-on-positives effect
Tobit
two-part model
country margins of trade
JEL: 
C24
C34
F14
Document Type: 
Working Paper

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