Volume 33, Number 1 (Winter) 1998: Symposium on Microeconomic Methods

Chay, Kenneth Y. , and Bo E. Honore. 1998. "Estimation of Semiparametric Censored Regression Models: An Application to Changes in Black-White Earnings Inequality During the 1960's." Journal of Human Resources 33(1):4-38.

Building on the work of Chay (1995), this study examines the impact of civil rights policies on black economic progress using individual-level panel data Many earnings records are censored and the degree of censoring changed during the period of interest. Consequently, valid estimates of the program effects must account for this censoring. Maximum likelihood estimation can be used if the error terms of the model are identically normally distributed We investigate the value of using weaker assumptions on the error process to estimate the laws impact. The analysis shows that there was significant black-white earnings convergence in the
South during the 1960$ We also find that semiparametric estimation methods are informative in pinpointing watch parts of the model are mis-specified.

Kenneth Y. Chay is a professor of economics at the University of California, Berkeley. Bo E. Honore is a professor of economics at Princeton University. This research was supported by the National Science Foundation and by the Alfred P. Sloan Foundation. The authors thank Richard Blundell, Dean Hyslop, Luojia Hu, Ekaterini Kyriazidou, James Powell, two anonymous referees and seminar participants at Stanford University for valuable comments. The data used in this article can be obtained beginning in May 1998 through February 2001 from Bo Honore, Department of Economics, Princeton University, Princeton NJ 08544.