Measuring the unidentified parameter of the extended Roy model of selectivity

Abstract In the extended Roy model of selectivity, the correlation coefficient between the disturbance terms in the two equations that are subject to selectivity is treated in the current literature as an unidentified parameter. This paper develops a method to produce a probabilistic statement about this parameter, which is of great interest for both theoretical and descriptive reasons. The method is illustrated with three examples drawn from published research.

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