International Journal of Advances in Science and Technology,

Vol. 3, No.3, 2011

Fuzzy Modified Parametric Sample Selection
Models

Yaya Sudarya Triana
1
and Muhamad Safiih
2
1
Department of Mathematics, Faculty of Science and Technology, University Malaysia Terengganu, Malaysia
yst_2000@yahoo.com

2
Department of Mathematics, Faculty of Science and Technology, University Malaysia Terengganu, Malaysia
safiihmd@umt.edu.my
Abstract

The sample selection model or the selectivity model is a combination of the probit and regression
models. The models are usually estimated by Heckman's two-step estimator. However, Heckman's
two-step estimator often performs poorly (see Wales and Woodland, Nelson, Paarsch, and Nawata).
This paper needs to consider the models estimation using fuzzy modeling approach, called Fuzzy
Parametric Sample Selection Model (FPSSM) to reduce the problem of uncertainty data that exists
in the Parametric Sample Selection Model (PSSM). In the context of parametric methods, the
sample selection model is studied. The best approach is to take advantage of the tools provided by
the theory of fuzzy sets. It seems particularly appropriate for modeling vague concepts. It is difficult
to determine some of the criteria and arrive at a quantitative value. Fuzzy sets theory and its
properties through the concept of fuzzy number. The fuzzy function used for solving uncertain of a
parametric sample selection model. Estimates from the fuzzy are used to calculate some of equation
of the sample selection model. Finally, estimates of the Mean, Standard Deviation (SD), Root Mean
Square Error (RMSE) and the other estimators can be obtained by Heckman two-step estimator
through iteration from some parameters and some of values.

Keywords: Fuzzy Number, Sample Selection Model, Heckman Two-Step Estimator, Econometric

1. Introduction

The sample selection model or the selectivity model is a combination of the probit and
regression models. Models with sample-selection biases (type II Tobit models) are widely used
in various fields of economics such as labour economics. For details and examples of the
models, see Maddala, Amemiya, and Mroz. For the estimation of these models, Heckman's
[1976, 1979] two-step estimator is often used. However, Heckman's two-step estimator
sometimes performs poorly (see Wales and Woodland [1980], Nelson [1984], Paarsch [1984],
and Nawata [1993, 1994]).
Sample Selection Model which has been introduced by Heckman's (1979), only focused on
the issue of wages of married women for the participant, but nevertheless, this estimation model
has been widely used in various fields, however sometimes perform poorly. Several studies
have been conducted on the sample selection model to examine the wages of married women
who work, until recently, no one is researching on wages for married women who do not work,
when in fact married women who do not work proved to have wages, this means it does not
work does not mean no wages at all and it does not work does not mean not working at all,
perhaps they also have passive income or they only part-time job, etc. The purpose of study
about non-participant, in order to reduce selection bias in the model, it is encouraging to
construct derived formulas and proven it using the simulation and real data.
In this study, method of calculating Heckmans two-step estimator is compared using modify
Heckmans two-step estimator (1979) for different samples. It also needs to consider the
estimation of models with fuzzy modeling approach by sample selection model called Fuzzy
Parametric Sample Selection Model (FPSSM). The empirical results of the Monte Carlo
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International Journal of Advances in Science and Technology,
Vol. 3, No.3, 2011

experiment in form of the Mean, Standard Deviation (SD), Root Mean-Square Error (RMSE)
and the other estimators can be obtained by Heckman two-step estimator through iteration from
some parameters, some of values and different samples.


2. Parametric Sample Selection Model (PSSM)

The discussion of sample selection was started by Roy (1951) in the economic literature, Roy
(1951) discussed that the traditional econometric approach to the selection model adopts a more
conservative approach and allows for selection on unobservables. Several methods have been
proposed to cope with this problem. Later this method extended by Gronau (1974), Heckman
(1974), and Lewis (1974). Issues are discussed regarding the sample selection bias in the
context of the decision by women to participate in the labour force or not (Schafgans, 2000).
The most widely used procedure has been suggested by Heckman (1976, 1979) is a process that
describes the employment outcome is implemented and information from this is used, in the second
stage, to obtain consistent estimates of the relevant parameters. Heckman (1976) has proposed the
PSSM as follows :


i
*
i i
i
'
i
*
i
i
i 1
'
i 0
*
i
d Y Y
otherwise 0
0 v W d if 1
d
u X Y
=

> + o =
=
+ | + | =

(1)
where
*
i
Y ,
*
i
d
= dependent variables
X
i
,W
i
= independent variables or vector of exogenous variables

0
,
1
, = unknown parameter vectors
u
i
, v
i
= error terms

In Equation (1) above are error terms (u, v) which are usually correlated, so that will cause the
value estimation of
0
and
1
unsatisfactory or inconsistent as a result of the regression equation of the
dependent variable Y and independent variable X. To reduce this problem, the approach of the error
terms are assumed to follow a normal bivariate distribution.
According to Schafgans (1996), Markus (1998) and Martins (2001), there are two parts in equation
(1). The first part is participation equation (a binary decision equation). The second part is the wage
equation (outcome equation or selection part). Independent variable X
i
usually contain at least one
variable which does not appear in variable W
i
. In the outcome equation describes the relationship
between the dependent variable Y
i
and independent variable X
i
, whereas in the selection equation
describes the relationship between the dependent variable d
i
and the independent variable W
i
.


3. Fuzzy Modeling

In this research discusses the modified Parametric Sample Selection Models (PSSM) for non-
participant by applying a fuzzy concept. The fuzzy modeling is based on the concept of fuzzy sets.
There are three phases to discuss of FPSSM, namely fuzzification of parameters, the fuzzy
environment and defuzzification. In the fuzzification stage, the value of the input variables (crisp
values) is converted into fuzzy values input from the membership of fuzzy sets. The method used in
this study is an alpha-cut which applied to the triangular fuzzy number for the all observation. The
alpha-cut method starts from 0.2 to 0.8 with increase of 0.2. Then applied into the triangular
membership function. By using alpha-cut, the result will be obtained from (x, w, y) as follows:


), x , x , x ( x
~
iu im il i
= ) y , y , y ( y
~
iu im il
*
i
= and ) w , w , w ( w
~
iu im il i
=

(2)
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The functions of membership are as below :

=
e

=
otherwise 0
] x , x [ x if
) x x (
) x x (
x x if 1
] x , x [ x if
) x x (
) x x (
) x (
iu im
im iu
iu
im
im il
il im
il
x
~
i

(3)

The same formula for
) y ( *
i
y
~

and ) w (
i
w
~ can be written like a formula for
) x (
x
~

To create the PSSM, then the first step is to change the membership (converting real-triangular
fuzzy membership values into a crisp value). A centroid method or the centre of gravity method is used
to calculate the outputs of the crisp value as the centre of area under the curve. The values of X
ic
, Y
ic
,
and W
ic
be the defuzzified values of , and respectively. The calculation of the centroid method
for X
ic
, Y
ic
, and W
ic
to formulas that are:

) X X X (
3
1
dx ) x (
dx ) x ( x
X
iu im il
i x
~
i x
~
ic
+ + =

=
}
}

(4)



4. The Modified Model

The fuzzy parametric sample selection model (FPSSM) is created as a hybrid with conventional
parametric sample selection model based on the Heckman model, fuzzy model will be written like
this:

N ,... 1 i , d y
~
y
~
otherwise 0 d
0 v
~
w
~
d if 1 d
u
~
x
~
y
~
i
*
ic i
i
i
'
i
*
i i
i
'
i
*
i
= =
=
s + o = =
+ | =

(5)

The terms
i
w
~
,
i
x
~
,
-
i
y
~
,
i
u
~
and
i
v
~
are fuzzy numbers with the membership functions
i
W
~ ,
i
X
~ ,
i
y
~ and
i
u
~ , respectively. In PSSM error term assumed to follow the bivariate normal distribution,
then the error term for FPSSM it also follows the bivariate normal distribution, i.e. :
( )
|
|
.
|

\
|
|
|
.
|

\
|
o
o o
1
, 0 N ~ v , u
uv
uv
2
u
ic ic


To fit a probit model with sample selection with the following two steps:
Step 1. Fit the probit model for the sample selection equation.
Step 2. Using the selected sample, fit the second step probit model merely by adding
the inverse Mills ratio from the first step to the main probit equation as an additional independent
variable.
For non-participant (d
i
= 0).
IMR is
) w ( 1
) w (
i
i
o u
o |
= , Obtained from


] 0 d | y [ E
*
i
s

=
) w ( 1
) w (
x
i
i '
i
o u
o |
o |


(6)


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Vol. 3, No.3, 2011


5. Simulation of Monte Carlo using Fuzzy Alpha-cut

The framework of the Monte Carlo simulation is similar to that of Paarsch (1984). The purpose of
the Monte Carlo simulation is used to calculate the values of the sample selection model. The modified
model is shown as follows.

) 0 v
~
w
~
( 1 d
u
~
x
~
y
~
i i 1 0 i
i i 1 0 i
s + o + o =
+ | + | =

(7)

i
y
~
is dependent variables and it is observable if d
i
=1
The following items are considered in the Monte Carlo study:
- The effect of the correlation of
i
x
~
and
i
w
~

- The effect of the correlation of
i
u
~
and
i
v
~

x
i
and w
i
are the exogenous variables and the values are as follows :
, s w
~
i 1 i
=
(8)
| |
2 2
i 2 i 1
i
) 1 (
s ) 1 ( s
x
~
t + t
t + t
=

(9)

s
1i
and s
2i
are independent and identifically distributed (iid) random variables distributed uniformly on
(0,20]

The values of the exogenous variables, x
i
and w
i
are as follows:
s
1i
and s
2i
are random uniform variables with mean 0 and variance 20. is the correlation coefficient of
x
i
and w
i
with = 0.0, 0.5, and 0.9 are considered. The fuzzy error terms )} v , u {(
i i
are jointly normal
and determined as follows:
, v
~
i 1 i
c =
(10)

2
0
2
0
i 2 i 1 0
i
) 1 (
) 1 (
u
~
+
c + c
=

(11)

} {
i 1
c are normal random variables with mean zero and variance 1. } {
i 2
c are i.i.d. normal random
variables with mean zero and variance 100. } {
i 1
c and } {
i 2
c are independently distributed.
0
is the
correlation coefficient of u
i
and v
i
with values of
0
= 0.0, 0.5, 0.7 and 0.9 considered. The error terms
are calculated twice, which is for the classical error terms as well as the fuzzy error terms. from [-
0.99, 0.99] with interval 0.01. The truth values of the parameters are

0
= -1.0,
1
= 0.1,
0
=-10.0 and
1
=1.0


6. Result Simulation

Result is shown from Table 1 to Table 5 are the Mean, SD, RMSE with n=100, 200 and 400 for
parameters of
0
,
1
. From this table, represented the -cuts of triangular fuzzy number with a value of
0.2, 0.4, 0.5, 0.6, and 0.8. The first column shows the parameter of phi with values 0.0, 0.5, 0.9, while
the second column shows the parameter of rho with a value of 0.1, 0.5, 0.7, 0.9.

The calculation of Monte Carlo simulation from Table 1 to Table 5 using fuzzy -cut 0.2, 0.4, 0.5, 0.6,
and 0.8. The effect of correlation can be viewed from the fuzzy exogenous variables between
w
~
and
x
~

and the effect of correlation of fuzzy error terms between
u
~
and
v
~
, and the effects of comparison
among several different sample sizes are n=100, n=200, and n=400, shown in the table on the columns
1, 2 and 3, while columns 4, 5, 6 and 7, 8, 9 show Mean, SD and RMSE of parameter
0
dan
1
, where
SD is standard deviation and RMSE is root mean square errors.
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Table 1 could be demonstrated that the mean of parameters of
0
and
1
showed about the consistency
information of the parameter estimator that approaches the true values
0
= -10 and
1
= 1, while the
SD and RMSE provide information about the level of efficiency for the parameters in the estimation.
Sample size n=100, n=200 and n=400 provides the information that the larger the sample size, the
smaller the values of SD and RMSE, it means that more efficient and accurate the estimator.

For example in Table 1 the value of RMSE of parameters
0
and
1
for sample size n=100, the values
of SD=1.374, RMSE=9.742 of parameter of
0
and the values of SD=0.693, RMSE=1.382 of parameter
of
1
, for sample size n=200, the values of SD=0.936, RMSE=9.661 of parameter of
0
and the values
of SD=0.487, RMSE=1.272 of parameter of
1
, while for sample size n=400, the values of SD=0.701,
RMSE=9.567 of parameter of
0
and the values of SD=0.346, RMSE=1.211 of parameter of
1
.

From Table 1 can be viewed that for the
o
- cut = 0.2, with sample size n = 100, where values of
0
and
are 0 (meaning no relationship between and ), so the value becomes small of SD and RMSE for
parameter of
0
, the values of SD = 1374, RMSE = 9742 and for parameter of
1
, the values of SD =
0693, RMSE = 1382. When the sample size increases become n = 200, SD and RMSE values for the
parameters
0
and
1
decreases, ie for value of SD = 0936, RMSE = 9661 of parameter
0
, and the
value of SD = 0487, RMSE = 1272 of the parameter
1
. When the sample size increases again for n =
400, SD and RMSE values for the parameters of
0
and
1
is smaller again, that is the values of SD =
0701, RMSE = 9567 for parameter of
0
and the values of SD = 0346, RMSE = 1211 for parameter of

1
. While
0
increases to moderate values of 0.5 (moderate correlation between fuzzy error term), then
the values of SD and RMSE becomes larger than when the value of rho = 0 (no error relationship
between fuzzy terms).

Increase in the value of
0
shown in Table 1 above indicate the greater correlation of fuzzy error terms
between
u
~
and
v
~
, the smaller the value of SD and RMSE. From the table also illustrates, that when
the value of
0
and strong (
0
and = 0.9), then the values of SD and RMSE increased, compared
with the value of which no correlation of
0
and are moderate. This shows that the occurrence of
multicollinearity of fuzzy exogenous variables between
i
w
~
and
i
x
~
), but the value of this
multicollinearity will be corrected by sample size that continues to expand.





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Table 1. Mean, SD, RMSE of FPSSM with n=100, 200, 400 for
0
,
1
and -cut = 0.2


0
n

1
Mean SD RMSE Mean SD RMSE
0.0
0.0
100 -9.671 1.374 9.742 1.103 0.693 1.382
200 -9.613 0.936 9.661 1.064 0.487 1.272
400 -9.530 0.701 9.567 1.059 0.346 1.211
0.5
100 -10.295 1.936 10.389 1.128 0.960 1.494
200 -10.230 1.335 10.295 1.072 0.674 1.350
400 -10.143 1.009 10.192 1.064 0.481 1.270
0.7
100 -10.233 1.797 10.320 1.114 0.896 1.462
200 -10.170 1.239 10.231 1.061 0.629 1.325
400 -10.087 0.933 10.133 1.054 0.448 1.249
0.9
100 -10.019 1.515 10.095 1.092 0.764 1.399
200 -9.962 1.041 10.014 1.047 0.536 1.278
400 -9.884 0.778 9.923 1.042 0.381 1.211
0.5
0.0
100 -9.616 1.373 9.687 0.988 0.486 1.209
200 -9.561 0.937 9.610 0.961 0.341 1.125
400 -9.482 0.704 9.519 0.957 0.243 1.076
0.5
100 -10.240 1.938 10.335 1.007 0.676 1.300
200 -10.178 1.339 10.244 0.967 0.474 1.187
400 -10.094 1.014 10.144 0.961 0.338 1.123
0.7
100 -10.178 1.798 10.266 0.996 0.630 1.274
200 -10.119 1.242 10.180 0.959 0.442 1.167
400 -10.039 0.937 10.085 0.954 0.315 1.107
0.9
100 -9.965 1.514 10.040 0.981 0.536 1.224
200 -9.910 1.043 9.962 0.949 0.376 1.130
400 -9.835 0.782 9.875 0.945 0.268 1.077
0.9
0.0
100 -9.657 1.374 9.728 1.066 0.626 1.327
200 -9.600 0.936 9.648 1.031 0.440 1.226
400 -9.518 0.701 9.555 1.026 0.313 1.168
0.5
100 -10.281 1.936 10.375 1.089 0.868 1.433
200 -10.217 1.336 10.282 1.038 0.609 1.299
400 -10.130 1.010 10.180 1.031 0.435 1.224
0.7
100 -10.219 1.797 10.307 1.076 0.810 1.403
200 -10.157 1.240 10.218 1.028 0.568 1.275
400 -10.075 0.934 10.121 1.022 0.405 1.204
0.9
100 -10.006 1.515 10.081 1.056 0.690 1.344
200 -9.949 1.041 10.001 1.015 0.485 1.231
400 -9.871 0.779 9.911 1.010 0.345 1.169


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Table 2. Mean, SD, RMSE of FPSSM with n=100, 200, 400 for
0
,
1
and -cut = 0.4


0
n

1
Mean SD RMSE Mean SD RMSE
0.0
0.0
100 -9.577 1.351 9.647 1.096 0.689 1.375
200 -9.559 0.919 9.607 1.061 0.487 1.270
400 -9.507 0.704 9.544 1.056 0.345 1.208
0.5
100 -10.160 1.904 10.253 1.119 0.954 1.486
200 -10.153 1.316 10.217 1.069 0.673 1.347
400 -10.104 1.016 10.154 1.060 0.479 1.266
0.7
100 -10.105 1.767 10.192 1.105 0.890 1.453
200 -10.097 1.221 10.158 1.058 0.628 1.322
400 -10.051 0.940 10.097 1.050 0.447 1.245
0.9
100 -9.909 1.490 9.984 1.084 0.759 1.391
200 -9.899 1.025 9.950 1.044 0.536 1.275
400 -9.854 0.783 9.893 1.038 0.380 1.208
0.5
0.0
100 -9.522 1.349 9.593 0.983 0.483 1.204
200 -9.508 0.920 9.556 0.959 0.341 1.122
400 -9.458 0.707 9.495 0.955 0.242 1.074
0.5
100 -10.105 1.905 10.199 1.000 0.672 1.293
200 -10.101 1.319 10.166 0.964 0.474 1.185
400 -10.055 1.021 10.106 0.958 0.338 1.121
0.7
100 -10.050 1.768 10.138 0.990 0.627 1.267
200 -10.046 1.223 10.107 0.957 0.442 1.165
400 -10.002 0.944 10.049 0.951 0.314 1.104
0.9
100 -9.855 1.489 9.930 0.975 0.533 1.218
200 -9.847 1.026 9.899 0.947 0.376 1.128
400 -9.805 0.787 9.845 0.943 0.267 1.075
0.9
0.0
100 -9.563 1.350 9.634 1.060 0.623 1.321
200 -9.546 0.919 9.594 1.028 0.439 1.223
400 -9.494 0.705 9.531 1.023 0.312 1.166
0.5
100 -10.146 1.904 10.239 1.081 0.863 1.425
200 -10.140 1.316 10.204 1.035 0.609 1.296
400 -10.092 1.017 10.142 1.027 0.434 1.220
0.7
100 -10.091 1.767 10.178 1.068 0.805 1.395
200 -10.084 1.221 10.145 1.025 0.568 1.272
400 -10.039 0.941 10.085 1.018 0.404 1.201
0.9
100 -9.896 1.489 9.971 1.049 0.686 1.337
200 -9.886 1.025 9.938 1.013 0.484 1.229
400 -9.842 0.784 9.881 1.008 0.344 1.166

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Vol. 3, No.3, 2011


Table 3. Mean, SD, RMSE of FPSSM with n=100, 200, 400 for
0
,
1
and -cut = 0.5


0
n

1
Mean SD RMSE Mean SD RMSE
0.0
0.0
100 -9.539 1.347 9.610 1.095 0.688 1.373
200 -9.540 0.917 9.588 1.061 0.487 1.270
400 -9.497 0.707 9.534 1.055 0.345 1.207
0.5
100 -10.105 1.896 10.199 1.118 0.952 1.484
200 -10.127 1.312 10.191 1.069 0.673 1.347
400 -10.089 1.019 10.140 1.059 0.479 1.265
0.7
100 -10.054 1.760 10.141 1.104 0.889 1.452
200 -10.073 1.217 10.133 1.058 0.628 1.322
400 -10.037 0.943 10.084 1.049 0.447 1.244
0.9
100 -9.866 1.484 9.941 1.083 0.758 1.390
200 -9.877 1.022 9.929 1.044 0.536 1.275
400 -9.842 0.787 9.881 1.037 0.380 1.207
0.5
0.0
100 -9.483 1.346 9.554 0.982 0.483 1.203
200 -9.489 0.917 9.537 0.959 0.341 1.122
400 -9.449 0.710 9.486 0.954 0.242 1.074
0.5
100 -10.049 1.899 10.143 0.998 0.671 1.291
200 -10.075 1.315 10.140 0.964 0.474 1.184
400 -10.041 1.024 10.092 0.957 0.337 1.120
0.7
100 -9.998 1.762 10.086 0.988 0.625 1.266
200 -10.022 1.219 10.082 0.956 0.442 1.165
400 -9.989 0.947 10.036 0.950 0.314 1.103
0.9
100 -9.810 1.483 9.885 0.974 0.532 1.217
200 -9.826 1.023 9.878 0.947 0.375 1.128
400 -9.793 0.790 9.834 0.942 0.267 1.074
0.9
0.0
100 -9.525 1.346 9.596 1.058 0.622 1.320
200 -9.527 0.916 9.575 1.028 0.439 1.223
400 -9.485 0.707 9.522 1.022 0.312 1.165
0.5
100 -10.091 1.897 10.185 1.079 0.861 1.423
200 -10.114 1.313 10.178 1.035 0.609 1.296
400 -10.077 1.020 10.128 1.026 0.433 1.219
0.7
100 -10.040 1.760 10.127 1.067 0.804 1.393
200 -10.060 1.217 10.120 1.025 0.568 1.272
400 -10.025 0.944 10.072 1.017 0.404 1.200
0.9
100 -9.852 1.483 9.927 1.048 0.685 1.335
200 -9.864 1.022 9.916 1.013 0.484 1.228
400 -9.829 0.788 9.869 1.007 0.343 1.165

September Issue Page 8 of 105 ISSN 2229 5216
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Vol. 3, No.3, 2011

Table 4. Mean, SD, RMSE of FPSSM with n=100, 200, 400 for
0
,
1
and -cut = 0.6


0
n

1
Mean SD RMSE Mean SD RMSE
0.0
0.0
100 -9.509 1.339 9.579 1.092 0.690 1.372
200 -9.516 0.916 9.564 1.059 0.485 1.268
400 -9.486 0.711 9.524 1.054 0.345 1.207
0.5
100 -10.060 1.886 10.153 1.114 0.954 1.482
200 -10.093 1.312 10.158 1.067 0.672 1.345
400 -10.072 1.025 10.123 1.058 0.479 1.264
0.7
100 -10.010 1.751 10.097 1.101 0.891 1.450
200 -10.041 1.218 10.101 1.056 0.627 1.320
400 -10.021 0.949 10.068 1.048 0.446 1.243
0.9
100 -9.828 1.477 9.903 1.081 0.759 1.388
200 -9.849 1.023 9.901 1.042 0.534 1.273
400 -9.828 0.792 9.868 1.037 0.380 1.206
0.5
0.0
100 -9.453 1.339 9.523 0.980 0.484 1.202
200 -9.465 0.916 9.513 0.957 0.340 1.121
400 -9.438 0.714 9.476 0.954 0.242 1.073
0.5
100 -10.004 1.889 10.098 0.996 0.672 1.290
200 -10.042 1.315 10.108 0.963 0.472 1.183
400 -10.024 1.030 10.075 0.956 0.337 1.119
0.7
100 -9.954 1.753 10.042 0.986 0.627 1.264
200 -9.990 1.220 10.051 0.955 0.440 1.163
400 -9.973 0.953 10.020 0.950 0.314 1.103
0.9
100 -9.772 1.476 9.847 0.972 0.533 1.215
200 -9.798 1.023 9.851 0.945 0.374 1.126
400 -9.780 0.795 9.820 0.941 0.267 1.074
0.9
0.0
100 -9.495 1.339 9.565 1.056 0.623 1.319
200 -9.503 0.916 9.551 1.026 0.438 1.221
400 -9.474 0.711 9.512 1.022 0.311 1.164
0.5
100 -10.046 1.887 10.139 1.076 0.863 1.422
200 -10.080 1.313 10.145 1.033 0.607 1.294
400 -10.060 1.026 10.111 1.025 0.433 1.218
0.7
100 -9.996 1.751 10.083 1.064 0.805 1.392
200 -10.028 1.218 10.088 1.023 0.566 1.270
400 -10.008 0.950 10.056 1.016 0.404 1.199
0.9
100 -9.814 1.476 9.889 1.045 0.686 1.334
200 -9.836 1.023 9.888 1.011 0.482 1.227
400 -9.816 0.793 9.856 1.006 0.343 1.164


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Table 5. Mean, SD, RMSE of FPSSM with n=100, 200, 400 for
0
,
1
and -cut = 0.8


0
n

1
Mean SD RMSE Mean SD RMSE
0.0
0.0
100 -9.449 1.345 9.520 1.005 0.701 1.308
200 -9.483 0.920 9.531 0.997 0.495 1.220
400 -9.465 0.720 9.503 1.005 0.349 1.166
0.5
100 -9.974 1.893 10.068 0.988 0.969 1.395
200 -10.045 1.320 10.111 0.977 0.685 1.280
400 -10.045 1.037 10.096 0.989 0.484 1.209
0.7
100 -9.928 1.757 10.016 0.983 0.905 1.368
200 -9.995 1.225 10.056 0.973 0.639 1.259
400 -9.995 0.959 10.043 0.984 0.451 1.191
0.9
100 -9.755 1.483 9.831 0.982 0.772 1.318
200 -9.809 1.030 9.861 0.972 0.544 1.221
400 -9.805 0.801 9.846 0.982 0.384 1.161
0.5
0.0
100 -9.390 1.344 9.461 0.916 0.492 1.154
200 -9.431 0.920 9.480 0.912 0.347 1.085
400 -9.416 0.723 9.454 0.918 0.245 1.043
0.5
100 -9.915 1.895 10.010 0.904 0.683 1.225
200 -9.994 1.322 10.059 0.897 0.482 1.135
400 -9.996 1.042 10.048 0.907 0.340 1.078
0.7
100 -9.869 1.759 9.958 0.901 0.637 1.203
200 -9.943 1.227 10.005 0.894 0.449 1.118
400 -9.946 0.964 9.994 0.903 0.317 1.064
0.9
100 -9.696 1.483 9.773 0.900 0.542 1.162
200 -9.757 1.030 9.810 0.894 0.382 1.087
400 -9.756 0.804 9.797 0.902 0.269 1.041
0.9
0.0
100 -9.434 1.345 9.505 0.976 0.634 1.260
200 -9.470 0.920 9.518 0.969 0.447 1.178
400 -9.453 0.721 9.491 0.977 0.315 1.127
0.5
100 -9.959 1.893 10.053 0.961 0.877 1.342
200 -10.032 1.320 10.098 0.951 0.619 1.235
400 -10.032 1.038 10.084 0.962 0.437 1.168
0.7
100 -9.913 1.758 10.001 0.957 0.818 1.317
200 -9.982 1.225 10.043 0.947 0.577 1.214
400 -9.982 0.960 10.030 0.958 0.408 1.151
0.9
100 -9.740 1.483 9.816 0.956 0.697 1.269
200 -9.796 1.029 9.848 0.947 0.492 1.178
400 -9.793 0.802 9.834 0.956 0.347 1.123



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Vol. 3, No.3, 2011

7. Conclusion and Discussion

Model Heckmans two step estimator is often used in various fields of economics such as labour
economics.
To reduce the problem of uncertainty that exists in the PSSM, then created the FPSSM. Fuzzy
concept that used for modified of PSSM provides an alternative for the handle to the problem when the
model involves the characteristic vagueness, uncertainty and ambiguity.
Result of FPSSM shows that the larger the sample size, the smaller the values of SD and RMSE, it
means that the more efficient and accurate the estimator, then the greater the value of -cut, the smaller
the values of SD and RMSE, and the more efficient and accurate.



8. References

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Limited Dependent Variables, and a Simple Estimation for such Models, Annals of Economic
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[21] Wales, T. J., Woodland, A. D., Sample selectivity and the estimation of labor supply functions,
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Authors Profile



Yaya Sudarya Triana is currently Ph.D student in Econometric, University Malaysia Terengganu. He received
Master degree in Information Technology, University of Indonesia, Jakarta-Indonesia and Undergraduate in
Statistics, University of Padjadjaran, Bandung-Indonesia.


Dr. Muhamad Safiih bin Lola received his Ph.D degree in Econometric, University Science Malaysia. He
received Master degree in Applied Statistics, University Putra Malaysia, and Undergraduate in Economics,
Northern University of Malaysia.
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