Hi,
I am trying to model a Switching Regression code, where there are two regimes and the slope coefficients differ across the regimes. Further, there is an underlying latent utility for being in one of the regimes.
Lee (1978) - Unionism and wage rates: a simultaneous equations model with qualitative and limited dependent variables, provides a good example of the model. Workers choose to join the unions on the basis of certain factors (modeled usign a probit model). However, those factors are unoberserved to the researcher. We only observe whether the worker is a part of the union or not. Depending on the union membership, we model separate regression equations for two regimes (union and non union).
It is a class of Sample Selection models, where we estimate a probit model in the first stage and then use the Inverse Mill's Ratio from the probit model as a control variable in the two regression equations. I was wondering if someone has a BUGS code to model the same.
Any help will be greatly appreciated.
Regards,
Alok R. Saboo
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