A switching frontier model for imperfect sample separation i

Frontier functions and switching regressions are combined. This allows economic agents to operate under different efficiency regimes, thus relaxing the assumption that all observations are drawn from the sample distribution of inefficiency. The switch is based on sample separation information (SSI) which is treated first as perfect, then as imperfect (or noisy). Available SSI suggests an observation's regime, however the information may not be accurate. By comparing results across alternative specifications of SSI as perfect and noisy, this approach provides evidence on the quality of the SSI. The technique's usefulness is demonstrated via an application to constrained labor supply.