Selection-bias correction based on the multinomial logit: An application to the Mexican labor market

In this presentation, we illustrate an application of a relatively new selection-bias correction methodology based on the multinomial logit model using the selmlog Stata command (Bourguignon, Fournier, and Gurgand, 2007, Journal of Economic Surveys 21: 174–205). selmlog allows for getting both consistent and efficient estimates of the selection process and a fairly good correction for the outcome equation, even when the independence of irrelevant alternatives (IIA) assumption is not achieved. The exercise depicts the current pattern of the occupational choices for the individuals in the Mexican labor market using a longitudinal panel with microdata from the Encuesta Nacional de Ocupación y Empleo (ENOE) during February 2008 to March 2009. We estimate an equation over an endogenously selected population. The command grants simplicity for both distributional and IIA assumptions for parametric models.