Hi,
I am using panel data to estimate the effect of drug use on wages and employment. I currently have a 3 equation simultaneous equation model with Log Wages, Employment and Drug Use as the 3 dependent variables. Unfortunately, many of the respondents answered saying their wages were 0 (and so I cannot compute Log Wages for them).
Question 1) How should I deal with those individuals whose wages are 0? Should I drop them? Or should I set Log Wage = 0 whenever Wage = 0?
Question 2) If I drop those individuals who have 0 wages, should I run a Heckman 2 Step Estimator?
Thanks!
I am using panel data to estimate the effect of drug use on wages and employment. I currently have a 3 equation simultaneous equation model with Log Wages, Employment and Drug Use as the 3 dependent variables. Unfortunately, many of the respondents answered saying their wages were 0 (and so I cannot compute Log Wages for them).
Question 1) How should I deal with those individuals whose wages are 0? Should I drop them? Or should I set Log Wage = 0 whenever Wage = 0?
Question 2) If I drop those individuals who have 0 wages, should I run a Heckman 2 Step Estimator?
Thanks!
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