Using Copulas to Model Switching Regimes with an Application to Child Labour*
Year: 2005
Type: article
Abstract: The copula approach to econometric modelling involves the specification of the separate components of the joint distribution of the random variables of interest: models built for each margin are bound together using a copula function. In this paper, the copula approach is used to construct models for switching regimes. The construct is illustrated by fitting a wage earnings model for child workers in the early 1900s, with regimes governed according to literacy. The results improve on earlier modelling efforts by Poirier and Tobias (2003), finding that a child worker may on average expect a reduction in earnings from being literate.
Source: Economic Record
Author: MURRAY D. SMITH
Institutions: The University of Sydney, University of Lincoln
Language: English
Subfield: Finance
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W1985835645