Fuzzy Parametric of Sample Selection Model Using Heckman Two-Step Estimation Models

Abstract

Problem statement: It is well known that, the standard approach to estimating a sample selection models shows an inconsistent estimation results if the distributional assumption are incorrect. Approach: An important progress in the last decade to develop an alternative to overcome the deficiency is through the used of semi-parametric method. However, the usage of semi-parametric approach still does not cover the deficiency of the model. Results: We introduced a fuzzy membership function for solving uncertainty data of a sample selection model and employed method for sample selection models, that is, the two-step estimators to estimate a model of the so-called the self-selection decision. Fuzzy Parametric of Sample Selection Model (FPSSM) is builds as a hybrid to the conventional parametric sample selection model. Conclusion/Recommendations: The result showed that as a whole, the FPSSM give a better estimate and consistent when compared to the Parametric of Sample Selection Model (PSSM). This application demonstrate that the proposed fuzzy modeling approach was quite reasonable and provides an important and significant finding compared with conventional method especially in terms of estimation and consistency.