ABSTRACT
In the models of choice we considered in Chapters 16 and 17 the outcomes were binary variables – did the individual have a job, was the student in a private or a government school? In this chapter we turn to models where the dependent variable can take a continuous range of values, but where there are a large number of zero values. We call such dependent variables ‘corner response variables’. The two applications we are assessing are (i) how firms in Africa invest and (ii) whether there is gender discrimination in education expenditure in India. What do these two applications have in common? The answer is that zero is a quite common outcome – in that some firms invest nothing in any particular year and some households spend nothing on educating their children.
