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We discuss a class of copula-based ordered probit models with endogenous switching. Such models can be useful for the analysis of self-selection in subjective well-being equations in general, and job satisfaction in particular, where assignment of regressors may be endogenous rather than random, resulting from individual maximization of well-being. In an application to public and private sector job satisfaction, and using data on male workers from the German Socio-Economic Panel for 2004, and using two alternative copula functions for dependence, we find consistent evidence for endogenous sector selection.

We model transitions between unemployment, low-paid and high-paid employment by British men using a first order Markov model with endogenous switching that also takes into account the endogeneity of initial conditions, selection into employment, and sample attrition. Our estimates indicate that all three selectivity issues are non-ignorable. We demonstrate several interrelationships between the dynamics of (un)employment and low-paid work between one year and the next, represented by forms of (cross-)state dependence. Controlling for heterogeneity, the probability of a man having a low-paid job in one year depends not only whether he had a job a year before but also whether that job was low paid. The probability of his being employed at all depends on whether he had a job the previous year.

The purpose of this paper is to determine if there are positive microeconomic effects from a state‐funded loan participation program on farm productivity and investment behavior.

The authors take the approach that access to credit solves a liquidity problem. If a credit constraint exists it results in a suboptimal allocation of resources and a reduction in farm output and profitability. A two‐stage regression model approach is used to analyze farmer survey and loan application data. In the first stage, a probit regression model is used to identify the farmers who are likely to be credit rationed. In the second stage, switching regression models are used to observe the effect of credit rationing on farm productivity and on farm investment behavior.

It is found that there are liquidity effects of credit constraints for a significant share of the beginning and low‐resource farmers who participated in the state‐funded farm loan program. After controlling for various farm and farmer characteristics, the estimated productivity and investment demand equations imply that a 1 percent increase in credit received by credit constrained farmers under the state program increased their gross income by about 0.49 percent, and their investments in depreciable assets by about 0.33 percent.

This paper is the first to apply the switching regression model to a state‐funded farm loan program for the purpose of evaluating the financial impacts on farmer participants.

This paper aims to build a theoretical model of the impact of farmers’ adoption behavior of soil and water conservation measures on the agricultural output to analyze the impact of farmers’ adoption behavior of soil and water conservation measures on agricultural output.

Based on the field survey data of 808 farmers households in three provinces (regions) of the Loess Plateau, this paper using the endogenous switching regression model to analyze the effect of farmers’ adoption behavior of soil and water conservation measures on agricultural output.

Soil erosion has a significant negative impact on agricultural output, and soil erosion has a significant positive impact on farmers’ adoption of soil and water conservation measures. Farmers adopt soil and water conservation measures such as engineering measures, biological measures and tillage measures to cope with soil erosion, which can increase agricultural output. Based on the counterfactual hypothesis, if farmers who adopt soil and water conservation measures do not adopt the corresponding soil and water conservation measures, their average output per ha output will decrease by 2.01%. Then, if farmers who do not adopt soil and water conservation measures adopt the corresponding soil and water conservation measures, their average output per ha output will increase by 12.12%. Government support and cultivated land area have a significant positive impact on farmers’ adoption behavior of soil and water conservation measures.

The research limitation is the lack of panel data.

Soil erosion has a significant negative impact on agricultural output, and soil erosion has a significant positive impact on farmers’ adoption of soil and water conservation measures. Farmers adopt soil and water conservation measures such as engineering measures, biological measures and tillage measures to cope with soil erosion, which can increase agricultural output.

The conclusion provides a reliable empirical basis for the government to formulate and implement relevant policies.

The contributions of this paper are as follows: the adoption behavior of soil and water conservation measures and agricultural output are included into the same analytical framework for empirical analysis, revealing the influencing factors of farmers’ adoption behavior of soil and water conservation measures and their output effects, enriching existing research. Using endogenous switching regression model and introducing instrumental variables to overcome the endogenous problem between the adoption behavior of soil and water conservation measures and agricultural output, and to analyze the influencing factors of farmers’ adoption behavior of soil and water conservation measures and its impact on agricultural output. Using the counter-factual idea to ensure that the two matched individuals have the same or similar attributes, to evaluate the average treatment effect of the behavior of soil and water conservation measures, to estimate the real impact of adaptation measures on agricultural output as accurately as possible and to avoid misleading policy recommendations.

This study aims to evaluate the effectiveness of national and international R&D support programmes on firms’ technology scouting, defined as firms’ use of external knowledge sources.

Drawing on a unique data set on R&D support programmes for small and medium-sized enterprises (SMEs) operating in both manufacturing and service sectors across 28 European countries, this study reports treatment effects estimated by the copula-based endogenous switching model, which takes into account unobserved firm heterogeneity.

Empirical results indicate that R&D support programmes have heterogeneous effects on technology scouting. In particular, a crowding-out effect arises in the case of informal sources of external knowledge, whereas additional effects are reported for formal, strategic sources.

For informal sources of external knowledge, a random distribution of R&D measures would have a substantially larger effect rather than using current selection criteria.

To the best of the authors’ knowledge, this is the first study to explore the policy effects on technology scouting applying a copula-based endogenous switching model. Most cross-sectional empirical studies use matching estimators, although their main disadvantage is the selection on observables.

Uses Bank of Italy’s Survey on Household Income and Wealth (SHIW) panel data for 1993 and 1995 to model transition probabilities at the bottom of the Italian wage distribution and to investigate the features and determinants of low‐wage mobility. The analysis is based on a bivariate probit model with endogenous switching which allows tackling the initial conditions problem, i.e. the potential endogeneity of the conditioning starting state. Results show the appropriateness of such a choice, the hypothesis of exogenous initial conditions being always rejected. Shows that while some factors such as education, sex and geographical location have an effect on low‐pay persistence, job‐related variables are more effective in avoiding falls into low pay from higher pay. It is also shown how raw persistence involves a considerable share of true state dependence, i.e. the experience of low pay raises, per se, the probability of future low‐pay episodes, irrespective of personal attributes.

The purpose of this paper is to investigate the determinants of the probability of being a teleworker and the extent of earnings differentials between teleworkers and traditional employees.

The analysis is grounded on a theoretical framework depicting endogenous telework assignment and wage variations based on individual bargaining. The empirical strategy allows for non-random telework assignment, generating from individual- and job-specific observed as well as unobserved factors.

Results are based on the Italian labor force survey and uncover a key role of gender, higher education and family composition as determinants of the probability of teleworking. Furthermore, teleworkers enjoy a wage premium ranging between 2.7 and 8 percent.

Accounting for observed individual and job-specific effects, by both standard linear regression and propensity score matching, largely reduces the extent of wage premium emerging from unconditional descriptives; the results of an endogenous switching regression model however suggest that failing to properly care for unobserved factors leads to the underestimation of returns to telework.

The purpose of this paper is to estimate the impact of financial derivatives on profitability in agricultural banks. Agricultural banks are new to the derivatives market and are unlikely to use financial derivatives for risk speculation. Thus, the paper also provides evidence on the effectiveness of financial derivatives as a risk management tool in small commercial banks.

The authors use call report data from Federal Reserve Bank of Chicago for 2006, 2008 and 2010 to estimate an endogenous switching model to evaluate how profitability of derivatives user and non‐user agricultural banks is affected by different risk factors. This approach allows banks' endogenous choices to use financial derivatives to be accounted for, and to build a counterfactual analysis – what user banks' profitability would have been if they did not participate in the derivatives activities.

Results indicate that risk management through financial derivatives in agricultural banks is effective and profitability of derivatives user agricultural banks is less affected by credit risk and interest risk in the sample period. Derivatives' activities have improved agricultural banks' profitability and these impacts were increasing over years. In particular, in 2010 without use of derivatives, user banks would have had one‐third lower profitability.

This research is the first to study the role of derivatives in agricultural banks and also provides empirical evidence on the effectiveness of risk management through financial derivatives in agricultural banks.

The purpose of this paper is to examine the impact of auditor switching on audit fee discounting in Iran. The increased competition in the Iranian audit market following audit market liberalization in 2001 has resulted in a rapid increase in auditor switching and reduces the relative bargaining power of auditors compared to the clients. It is expected that auditor switching results in fee discounting because the relative bargaining power of an auditor (client) is likely to be at the minimum (maximum) point during the initial period of engagement. Since the increased bargaining power of a client in initial year seems to be different in the case of different type of auditor switching (from a state auditor to a private and from a private auditor to another), the magnitude of fee discounting is expected to be different.

The objective is tested using a sample of 1,022 firm-year observations between 2001 and 2010. This study applies the multivariate regression model using the first difference specification of audit fee as a dependent variable.

Multivariate analysis reveals that auditor switching results in 14 percent of fee discounting. In addition, the results show that 18 and 13 percent of fees discounting during the initial year of engagement arise from cases of auditor switching involving a change from state auditors to private auditors, and a change from one private auditor to another, respectively. The findings support bargaining power view explanation in relation to audit fees discounting in initial year engagement.

This study is the first to examine the impact of auditor switching (and analyzed different types of auditor switching) on audit fee discounting using the bargaining power view.

The aim of this paper is to analyze the effects of access to credit on maize productivity in Mali, by identifying the determinants of credit market participation and maize yield, and then estimating the impact of credit on maize yield.

This study analyzes the impact of credit on maize productivity using data from the World Bank 2014 Living Standards Measurement Survey (LSMS) on Mali, and the endogenous switching regression (ESR) model.

The results suggest a positive effect of credit on maize yield in Mali. Farm size, production shocks and the female gender exert negative effects on credit market participation, unlike education, intercropping with cotton, male family labor and fertilizer use which show positive effects. Farm size has a negative effect on maize yield, but both male family labor, and fertilizer use exert positive effects. Although the use of credit improves agricultural yields, the results show a greater potential effect for rationed producers, than credit users.

These results suggest that implementing a credit strategy that allows those currently excluded from the credit market, to participate, could substantially increase productivity and maize production output in furtherance of the country's food security strategy. Gender-based targeting is needed to bridge the gender gap in access to credit.

As far as the authors are aware, this study is the first to explore the credit-farm productivity links in Mali, while addressing selection bias.