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- Title
Binary endogenous treatment in stochastic frontier models with an application to soil conservation in El Salvador.
- Authors
Centorrino, Samuele; Pérez‐Urdiales, María; Bravo‐Ureta, Boris; Wall, Alan
- Abstract
Summary: Numerous programs exist to promote productivity, alleviate poverty, and enhance food security in developing countries. Stochastic frontier analysis can be helpful to assess their effectiveness. However, challenges can arise when accounting for treatment endogeneity, often intrinsic to these interventions. We study maximum likelihood estimation of stochastic frontier models when both the frontier and inefficiency depend on a potentially endogenous binary treatment. We use instrumental variables to define an assignment mechanism and explicitly model the density of the first and second‐stage error terms. We provide empirical evidence using data from a soil conservation program in El Salvador.
- Subjects
EL Salvador; SOIL conservation; STOCHASTIC models; STOCHASTIC frontier analysis; MAXIMUM likelihood statistics; FOOD security
- Publication
Journal of Applied Econometrics, 2024, Vol 39, Issue 3, p365
- ISSN
0883-7252
- Publication type
Article
- DOI
10.1002/jae.3020