Information technology outsourcing and firm productivity: eliminating bias from selective missingness in the dependent variable

Breunig, Christoph, Kummer, Michael, Ohnemus, Joerg and Viete, Steffen (2020) Information technology outsourcing and firm productivity: eliminating bias from selective missingness in the dependent variable. The Econometrics Journal, 23 (1). pp. 88-114. ISSN 1368-4221

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Missing values are a major problem in all econometric applications based on survey data. A standard approach assumes data are missing at random and uses imputation methods or even listwise deletion. This approach is justified if item nonresponse does not depend on the potentially missing variables’ realization. However, assuming missingness at random may introduce bias if nonresponse is, in fact, selective. Relevant applications range from financial or strategic firm-level data to individual-level data on income or privacy-sensitive behaviors. In this paper, we propose a novel approach to deal with selective item nonresponse in the model’s dependent variable. Our approach is based on instrumental variables that affect selection only through a partially observed outcome variable. In addition, we allow for endogenous regressors. We establish identification of the structural parameter and propose a simple two-step estimation procedure for it. Our estimator is consistent and robust against biases that would prevail when assuming missingness at random. We implement the estimation procedure using firm-level survey data and a binary instrumental variable to estimate the effect of outsourcing on productivity.

Item Type: Article
Additional Information:
Uncontrolled Keywords: c14 - semiparametric and nonparametric methods: general,c36 - instrumental variables (iv) estimation,d24 - production; cost; capital; capital, total factor, and multifactor productivity; capacity,l24 - contracting out; joint ventures; technology licensing
Faculty \ School: Faculty of Social Sciences > School of Economics
UEA Research Groups: Faculty of Social Sciences > Research Groups > Applied Econometrics And Finance
Faculty of Social Sciences > Research Groups > Industrial Economics
Faculty of Social Sciences > Research Centres > Centre for Competition Policy
Depositing User: LivePure Connector
Date Deposited: 31 Jan 2020 04:22
Last Modified: 14 May 2023 00:12
DOI: 10.1093/ectj/utz016

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