### Abstract

Rothe (Econometrica 80, 2269–2301 2012) introduces a new class of parameters called ‘Partial Distributional Policy Effects’ (PPE) to estimate the impact on the marginal distribution of an outcome variable due to a change in the unconditional distribution of a single covariate. Since the strict exogeneity assumption of all covariates makes this approach less applicable in empirical research, we propose the identification of the PPEs for a continuous endogenous explanatory variable using the control variable approach developed by Imbens and Newey (Econometrica 77, 1481–1512 2009). We also apply this proposed control variable PPE approach to investigate how poverty and black-white racial wage gaps contribute to the steep increase in the incarceration rate of black men over the period 1980-2010. Our control variable PPE estimates suggest that although the fall in the racial wage gap does not explain the changes in the incarceration rate of black men, changes in the poverty rate contribute about one-third of the steep increase in the incarceration rate at the upper-tail of the distribution.

Original language | English (US) |
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Journal | Sankhya B |

DOIs | |

State | Published - Jan 1 2019 |

### Fingerprint

### Keywords

- Distribution regression
- Partial distributional policy effects
- Primary 62
- Quantile regression
- Secondary 60
- Wage inequality

### ASJC Scopus subject areas

- Statistics and Probability
- Statistics, Probability and Uncertainty
- Applied Mathematics

### Cite this

**Partial Distributional Policy Effects Under Endogeneity.** / Baltagi, Badi H; Ghosh, Pallab K.

Research output: Contribution to journal › Article

}

TY - JOUR

T1 - Partial Distributional Policy Effects Under Endogeneity

AU - Baltagi, Badi H

AU - Ghosh, Pallab K.

PY - 2019/1/1

Y1 - 2019/1/1

N2 - Rothe (Econometrica 80, 2269–2301 2012) introduces a new class of parameters called ‘Partial Distributional Policy Effects’ (PPE) to estimate the impact on the marginal distribution of an outcome variable due to a change in the unconditional distribution of a single covariate. Since the strict exogeneity assumption of all covariates makes this approach less applicable in empirical research, we propose the identification of the PPEs for a continuous endogenous explanatory variable using the control variable approach developed by Imbens and Newey (Econometrica 77, 1481–1512 2009). We also apply this proposed control variable PPE approach to investigate how poverty and black-white racial wage gaps contribute to the steep increase in the incarceration rate of black men over the period 1980-2010. Our control variable PPE estimates suggest that although the fall in the racial wage gap does not explain the changes in the incarceration rate of black men, changes in the poverty rate contribute about one-third of the steep increase in the incarceration rate at the upper-tail of the distribution.

AB - Rothe (Econometrica 80, 2269–2301 2012) introduces a new class of parameters called ‘Partial Distributional Policy Effects’ (PPE) to estimate the impact on the marginal distribution of an outcome variable due to a change in the unconditional distribution of a single covariate. Since the strict exogeneity assumption of all covariates makes this approach less applicable in empirical research, we propose the identification of the PPEs for a continuous endogenous explanatory variable using the control variable approach developed by Imbens and Newey (Econometrica 77, 1481–1512 2009). We also apply this proposed control variable PPE approach to investigate how poverty and black-white racial wage gaps contribute to the steep increase in the incarceration rate of black men over the period 1980-2010. Our control variable PPE estimates suggest that although the fall in the racial wage gap does not explain the changes in the incarceration rate of black men, changes in the poverty rate contribute about one-third of the steep increase in the incarceration rate at the upper-tail of the distribution.

KW - Distribution regression

KW - Partial distributional policy effects

KW - Primary 62

KW - Quantile regression

KW - Secondary 60

KW - Wage inequality

UR - http://www.scopus.com/inward/record.url?scp=85062030358&partnerID=8YFLogxK

UR - http://www.scopus.com/inward/citedby.url?scp=85062030358&partnerID=8YFLogxK

U2 - 10.1007/s13571-019-00190-1

DO - 10.1007/s13571-019-00190-1

M3 - Article

AN - SCOPUS:85062030358

JO - Sankhya B

JF - Sankhya B

SN - 0976-8386

ER -