Ky. Chay et Be. Honore, ESTIMATION OF SEMIPARAMETRIC CENSORED REGRESSION-MODELS - AN APPLICATION TO CHANGES IN BLACK-WHITE EARNINGS INEQUALITY DURING THE 1960S, The Journal of human resources, 33(1), 1998, pp. 4-38
Building on the work of Chay (1995), this study Examines the impact of
civil rights policies on black economic progress using individual-lev
el panel data. Many earnings records are censored and the degree of ce
nsoring changed during the period of interest. Consequently, valid est
imates 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 w
eaker assumptions on the error process to estimate the laws impact. Th
e analysis shows that there was significant black-white earnings conve
rgence in the South during the 1960s. We also find that semiparametric
estimation methods are informative in pinpointing which parts of the
model are mis-specified.