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Copula Based Polychotomous Choice Selectivity Model: Application to Occupational Choice and Wage Determination of Older Workers

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Book cover Econometrics of Risk

Part of the book series: Studies in Computational Intelligence ((SCI,volume 583))

Abstract

This paper aims to estimate the occupational choice equation simultaneously with wage equation for older workers in Thailand by applying the copula approach to a polychotomous choice selectivity model. Several of the copula functions, such as the Frank and Student’s \(t\) copulas are compared to the standard model which is restricted to a joint normality assumption. This paper demonstrates that a polychotomous choice selectivity model based on the copula approach performs better than the standard one. And, it is evident that among the copula based model, the Frank copula-based model provides the best fit. Also, these results show the presence of highly significant dependency of unobservable factors between the occupational choice regression and the wage regression for unskilled and skilled workers, which implies that the selectivity bias exists. The empirical results show that the older workers who live in Bangkok earn higher wage than those who live outside Bangkok. The gender variable has no impact on wages for the high skilled older workers. For the unskilled, the male worker earns more. A surprised result is that the experience has the significantly negative impact on the wages regardless of the level of the skill of the older workers. This needs serious further research in depth to explain this phenomena.

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Acknowledgments

We would like to thank the referees for their comments and suggestions on the manuscript and National Statistical Office for database. The first author was supported by CHE PhD scholarship.

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Authors and Affiliations

  1. Faculty of Economics, Chiang Mai University, Chiang Mai, Thailand

    Anyarat Wichian, Jirakom Sirisrisakulchai & Songsak Sriboonchitta

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  1. Anyarat Wichian
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  2. Jirakom Sirisrisakulchai
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  3. Songsak Sriboonchitta
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Correspondence to Anyarat Wichian .

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Editors and Affiliations

  1. Japan Advanced Institute of Science and Technology, Nomi, Japan

    Van-Nam Huynh

  2. Department of Computer Science, University of Texas at El Paso, El Paso, Texas, USA

    Vladik Kreinovich

  3. Faculty of Economics, Chiang Mai University, Chiang Mai, Thailand

    Songsak Sriboonchitta

  4. Faculty of Economics, Chiang Mai University, Chiang Mai, Thailand

    Komsan Suriya

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Wichian, A., Sirisrisakulchai, J., Sriboonchitta, S. (2015). Copula Based Polychotomous Choice Selectivity Model: Application to Occupational Choice and Wage Determination of Older Workers. In: Huynh, VN., Kreinovich, V., Sriboonchitta, S., Suriya, K. (eds) Econometrics of Risk. Studies in Computational Intelligence, vol 583. Springer, Cham. https://doi.org/10.1007/978-3-319-13449-9_25

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  • DOI: https://doi.org/10.1007/978-3-319-13449-9_25

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  • Publisher Name: Springer, Cham

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  • Online ISBN: 978-3-319-13449-9

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