nep-dcm New Economics Papers
on Discrete Choice Models
Issue of 2004‒12‒20
seven papers chosen by
Philip Yu
Hong Kong University

  1. Sunk Costs of Exports By Matteo Bugamelli; Luigi Infante
  2. Do Migrants Get Good Jobs? New Migrant Settlement in Australia By Junankar, P. N. (Raja); Mahuteau, Stéphane
  3. Interrelationships Between Labor and Capital Adjustment Decisions By Edlira Narazani
  4. A Simplified Test for Preference Rationality of Two-Commodity Choice By Shomu Banerjee; James H. Murphy
  5. Bargaining Sets of Voting Games By Bezalel Peleg; Peter Sudholter
  6. Modelo logit multinomial y regresion con variables ficticias: una aplicacion regional al sector lacteo By Barreiro, Jose Manuel; Ruzo, Emilio; Losada, Fernando
  7. Determinants Of Entrepreneurship In Europe By Grilo, I.; Thurik, A.R.

  1. By: Matteo Bugamelli (Bank of Italy, Economic Research Department); Luigi Infante (Bank of Italy, Milan)
    Abstract: Using a very large panel dataset of Italian manufacturing firms, we test an empirical model of foreign markets participation with sunk costs. The period of analysis (1982-1999) is exceptionally informative: the large fluctuations in the lira exchange rate determined substantial flows of firms in and out of foreign markets. We find that sunk costs of exporting are very important: past experience in foreign markets increases the probability of exporting by about 70 percentage points. Although the assets entailing such costs depreciate quite slowly, new exporters have to acquire them very soon after entry. Altogether, these results suggest that the break in the Italian aggregate export supply function caused by the depreciation of the 1990s can be considerable and long-lasting. We then relate sunk costs to firm size and find that they are an important barrier to export, especially for the myriad of Italian small and medium firms. Finally, we provide some new evidence that sunk costs are indeed related to the need to collect information on foreign market/country characteristics.
    Keywords: exports, sunk costs, firm size, information, binary choice models
    JEL: F10 L10 L60 C25
    Date: 2003–03
  2. By: Junankar, P. N. (Raja) (University of Western Sydney and IZA Bonn); Mahuteau, Stéphane (University of Western Sydney)
    Abstract: This paper investigates the ease with which recent immigrants to Australia from different countries and with different visa categories enter employment at an appropriate level to their prior education and experience in the source country. Unlike most of the earlier research in this field that studied the labour market status of migrants (probabilities of employment, or unemployment, or participation, or wage equation) this paper focuses on the quality of job that the migrant obtains on arrival in Australia. We provide alternative definitions of what is a good job in terms of objective and subjective criteria. The paper uses two sets of the Longitudinal Survey of Immigrants to Australia data: the first cohort that arrived in 1993-95 and the second cohort that arrived in 1999-2000. In particular we would study how changes in social security legislation in 1997, (two year waiting period for eligibility for benefits) affected the quality of job held by new migrants. In comparing the behaviour of migrants in the labour market with and without access to social security benefits we would study whether migrants are more likely to accept bad jobs after the legislative changes. The paper uses bivariate probit models to estimate the probabilities of holding a good job in terms of the usual human capital and demographic variables (including the visa category for entry into Australia). Our results suggest that the policy change had a positive impact on the probability to find a job but a negative impact to hold a good job.
    Keywords: immigrants, immigrant policies, job satisfaction, good jobs, labour market outcomes, bivariate probit
    JEL: J61 J68 C25
    Date: 2004–12
  3. By: Edlira Narazani (University of Turin)
    Abstract: This paper intends to provide empirical evidence on the interrelationship between employment and capital adjustment. I employ a dynamic logit model to estimate this interrelationship using a data set of huge Italian firms. I find that these firms tend to hire a substantial number of employees during an investment spike episode. But when I consider the firms across industry sectors, ownership type and other groupings, I find that there are some firms eager to hire workers only during an investment spike and others eager to hire employees only after the investment spike. Also I try to extend the “augmented adjustment-cost function” for employment and capital and allow the inaction range of employment (capital) adjustment to capture the effect of capital (employment) in a linear way. Another aim of this paper is to investigate the trend of productivity growth rates in the presence of huge labor and capital adjustments. I, then, find that firms are more eager to hire a substantial number of employees in the same time that the productivity growth rates decrease. With respect to the firing spikes, decreasing labor productivity is followed by higher probabilities of substantial firing in the next period. With respect to investment, significant positive correlations exist between the probabilities of current investment spikes and the productivity growth rates at the next period. Finally, I find that old firms seem less inclined to hire substantially employees and more inclined to have investment spikes.
    Keywords: Interrelationship, investment, adjustment, labor
    JEL: J
    Date: 2004–12–15
  4. By: Shomu Banerjee; James H. Murphy
    Abstract: We provide a simplified test to determine if choice data from a two-commodity consumption set satisfies the Generalized Axiom of Revealed Preference (GARP), and thus the preference or utility maximization hypothesis. We construct an algorithm for this test and illustrate its application on experimental choice data.
    Date: 2004–12
  5. By: Bezalel Peleg; Peter Sudholter
    Abstract: Let A be a finite set of m <FONT FACE="Symbol">&#179;</FONT> 3 alternatives, let N be a finite set of n <FONT FACE="Symbol">&#179;</FONT> 3 players and let R<SUP>n</SUP> be a profile of linear preference orderings on A of the players. Throughout most of the paper the considered voting system is the majority rule. Let u<SUP>N</SUP> be a profile of utility functions for R<SUP>N</SUP>. Using <FONT FACE="Symbol">a</FONT>-effectiveness we define the NTU game V<SUB>u<SUP>N</SUP></SUB> and investigate its Aumann-Davis-Maschler and Mas-Colell bargaining sets. The first bargaining set is nonempty for m = 3 and it may be empty for m <FONT FACE="Symbol">&#179;</FONT> 4. Moreover, in a simple probabilistic model, for fixed m, the probability that the Aumann-Davis-Maschler bargaining set is nonempty tends to one if n tends to infinity. The Mas-Colell bargaining set is nonempty for m <FONT FACE="Symbol">&#163;</FONT> 5 and it may be empty for m <FONT FACE="Symbol">&#179;</FONT> 6. Moreover, we prove the following startling result: The Mas-Colell bargaining set of any simple majority voting game derived from the k-th replication of R<SUP>N</SUP> is nonempty, provided that k <FONT FACE="Symbol">&#179;</FONT> n + 2. We also compute the NTU games which are derived from choice by plurality voting and approval voting, and we analyze some interesting examples.
    Keywords: NTU game; bargaining set; majority rule; plurality voting; approval voting
    JEL: D71
    Date: 2004–12
  6. By: Barreiro, Jose Manuel; Ruzo, Emilio; Losada, Fernando
    Abstract: La creación de marcas fuertes es una de las principales estrategias utilizadas por las empresas en la actualidad con el objeto de lograr una ventaja competitiva. De este modo, uno de los principales problemas que se plantean es la valoración de este activo, cuestión recogida ampliamente en numerosas investigaciones previas. En el presente trabajo se establece una aproximación al valor de marca desde el ámbito comercial, centrado en el proceso de elección del consumidor, utilizando para ello dos metodologías alternativas, un modelo logit multinomial y un modelo de regresión con variables ficticias. Para ello se emplearán los datos de ventas obtenidos del escáner óptico de un distribuidor detallista sobre las marcas del sector lácteo vendidas en una región específica.
    Date: 2004
  7. By: Grilo, I.; Thurik, A.R. (Erasmus Research Institute of Management (ERIM), Erasmus University Rotterdam)
    Abstract: This paper uses an Eclectic Framework explaining entrepreneurship incorporating different streams of literature and spanning different disciplines. The Eclectic Framework integrates factors shaping the demand for entrepreneurship on the one hand, with those influencing the supply of entrepreneurs on the other hand. It also creates insight into the role of public policy identifying the channels through which the demand or the supply of entrepreneurship can be shifted. In its empirical part the present paper estimates a multinomial logit using survey data from the 15 EU member states, Norway, Iceland, Liechtenstein and the US to establish the effect of demographic and other variables on various entrepreneurial engagement levels. Data of two Entrepreneurship Flash Eurobarometer surveys (2003 and 2004) containing over 20,000 observations are used. Other than demographic variables, the set of explanatory variables used includes the perception by respondents of administrative complexities, of availability of financial support, a rough measure of risk tolerance, the respondents? preference for self-employment and country specific effects. The most striking result is that the perception of lack of financial support has no discriminative effect across the various levels of entrepreneurial engagement.
    Keywords: Entrepreneurship;determinants;nascent entrepreneurship;multinomial logit;barriers to entry;
    Date: 2004–12–10

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