Hi All,
Will a Heckman two-step correction model alleviate selection bias that results from selection into an explanatory variable? Everything I have read online indicates that the Heckman correction only deals with selection on the outcome variable (such as when hourly wage is missing for people who do not work and you want to estimate the effect of schooling on hourly wages). My empirical setting is that I want to look at the effect of health coverage on wages of people who are employed in the agricultural (ag) sector (and other ag employee outcomes), but ag sector employees who have health coverage may tend to have higher ability, so the selection issue is that people with higher ability may be more likely to get hired at a place of employment that offers health coverage. To me this seems like a classic omitted variables bias problem rather than a Heckman selection issue, but I would value comments that either validate my assessment or provide evidence that a Heckman correction could address that type of selection, too. A colleague of mine suggested using a Heckman model, and I'm not convinced that is appropriate. Thanks in advance for your comments.
Will a Heckman two-step correction model alleviate selection bias that results from selection into an explanatory variable? Everything I have read online indicates that the Heckman correction only deals with selection on the outcome variable (such as when hourly wage is missing for people who do not work and you want to estimate the effect of schooling on hourly wages). My empirical setting is that I want to look at the effect of health coverage on wages of people who are employed in the agricultural (ag) sector (and other ag employee outcomes), but ag sector employees who have health coverage may tend to have higher ability, so the selection issue is that people with higher ability may be more likely to get hired at a place of employment that offers health coverage. To me this seems like a classic omitted variables bias problem rather than a Heckman selection issue, but I would value comments that either validate my assessment or provide evidence that a Heckman correction could address that type of selection, too. A colleague of mine suggested using a Heckman model, and I'm not convinced that is appropriate. Thanks in advance for your comments.
