The second-stage in the Heckman selection correction is including the _____ in the second-stage regression to control for the potential sample-selection bias.
A)estimated residuals
B)calculated inverse Mills ratios
C)predicted value of the dependent variable
D)predicted value of the self-selection variable

Question

Quizplus · Accepted Answer

In the Heckman selection correction, the inverse Mills ratio is included in the second-stage regression to account for the potential sample-selection bias. The inverse Mills ratio is derived from the first-stage regression, which models the self-selection variable as a function of the observed variables. The inverse Mills ratio is then used as a control variable in the second-stage regression to correct for sample selection bias.

The Second-Stage in the Heckman Selection Correction Is Including the _____