A causal interpretation of extensive and intensive margin effects in generalized Tobit models

No 1012, SOI - Working Papers from Socioeconomic Institute - University of Zurich

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%.

Keywords: Limited dependent variables; potential outcomes; causality; conditional-on-positives effect; Tobit; two-part model; country margins of trade (search for similar items in EconPapers)
JEL-codes: C24 C34 F14 (search for similar items in EconPapers)
Pages: 32 pages
Date: 2010-11
New Economics Papers: this item is included in nep-ecm and nep-int
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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https://www.zora.uzh.ch/id/eprint/51794/1/wp1012.pdf first version, 2010 (application/pdf)

Related works:
Journal Article: A Causal Interpretation of Extensive and Intensive Margin Effects in Generalized Tobit Models (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:soz:wpaper:1012

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