nep-dcm New Economics Papers
on Discrete Choice Models
Issue of 2005‒01‒16
six papers chosen by
Philip Yu
Hong Kong University

  1. Parametric and semiparametric estimation of sample selection models: an empirical application to the female labour force in Portugal By Danilo Coelho; Helena Veiga; Róbert Veszteg
  2. Preference heterogeneity and willingness to pay for travel time By Francisco Javier Amador; Rosa Marina González; Juan de Dios Ortúzar
  3. Location Choice and Employment Decisions: A Comparison of German and Swedish Multinationals By Sascha Becker; Karolina Ekholm; Robert Jaeckle; Marc Andreas Muendler
  4. On Modeling Household Labor Supply with Taxation By Bargain, Olivier
  5. Eliciting Public Preferences For Managing Cultural Heritage By Ugo Colombino; Annamaria Nese; Patrizia Riganti
  6. Reporting Bias and Heterogeneity in Self-Assessed Health. Evidence from the British Household Panel Survey By Cristina Hernandez-Quevedo; Andrew M Jones; Nigel Rice

  1. By: Danilo Coelho; Helena Veiga; Róbert Veszteg
    Abstract: This comment corrects the errors in the estimation process that appear in Martins (2001). The first error is in the parametric probit estimation, as the previously presented results do not maximize the log-likelihood function. In the global maximum more variables become significant. As for the semiparametric estimation method, the kernel function used in Martins (2001) can take on both positive and negative values, which implies that the participation probability estimates may be outside the interval [0,1]. We have solved the problem by applying local smoothing in the kernel estimation, as suggested by Klein and Spady (1993).
    Keywords: parametric estimation, semiparametric estimation, sample selection model
  2. By: Francisco Javier Amador (Universidad de La Laguna; Instituto Universitario de Desarrollo Regional and Departamento de Análisis Económico; Tenerife; Spain); Rosa Marina González (Universidad de La Laguna; Instituto Universitario de Desarrollo Regional and Departamento de Análisis Económico; Tenerife; Spain); Juan de Dios Ortúzar (Pontificia Universidad Católica de Chile;Departament of Transport Engineering; Santiago; Chile)
    Abstract: We examined different model specifications to detect the presence of preference heterogeneity in a mode choice context. The specification that worked best allows for both systematic and random variations in tastes. Using parameters obtained at the individual level through Bayesian inference methods, subjective values of travel time (SVT) and expected individual compensated variation were derived and aggregated to obtain measures of social welfare. Results suggest that the benefit measures, both at the individual and at the social level, are sensitive to preference heterogeneity assumptions. SVT and welfare changes derived from travel time reductions could be underestimated if the traditional assumption of taste homogeneity is made (we detected differences up to 30% in both types of measures). We also obtained an empirical value for the error made when evaluating changes in social welfare using an approximation of the expected individual compensated variation (expressed as a function of individual SVT) rather than its exact expression.
    Keywords: Preference heterogeneity, subjective value of travel time, compensated variation, random parameters logit, Bayesian methods.
    Date: 2004–12
  3. By: Sascha Becker; Karolina Ekholm; Robert Jaeckle; Marc Andreas Muendler
    Abstract: Using data for German and Swedish multinational enterprises (MNEs), this paper assesses international employment patterns. It analyzes determinants of location choice and the degree of substitutability of labor across locations. Countries with highly skilled labor forces attract German MNEs, but we find no such evidence for Swedish MNEs. This is consistent with the hypothesis that German MNEs locate production stages intensive in high-skilled labor abroad. In MNEs from either country, affiliate employment tends to substitute for employment at the parent firm. On the margin, substitutability is the strongest with respect to affiliate employment in Western Europe. A one percent larger wage gap between Germany and locations in Central and Eastern Europe (CEE) is estimated to be associated with 900 fewer jobs in German parents and 5,000 more jobs in affiliates located in CEE. A one percent larger wage gap between Sweden and CEE is estimated to be associated with 140 fewer jobs in Swedish parents and 260 more jobs in affiliates located in CEE.
    Keywords: multinational enterprises, location choice, multinomial choice, labor demand, translog cost function
    JEL: F21 F23 J21 J23
    Date: 2005
  4. By: Bargain, Olivier (IZA Bonn and DELTA, Paris)
    Abstract: Discrete-choice models provide a simple way of representing utility-maximizing labor supply decisions in the presence of highly nonlinear and possibly non-convex budget constraints. Thus, it is not surprising that they are so extensively used for ex-ante evaluation of taxbenefit reforms. The question asked in this paper is whether it is possible and desirable to get still more flexibility by relaxing some of the usual constraints imposed on household preferences and rationality. We first suggest a model which attains flexibility by making parameters vary freely across hours choices. By embedding the traditional structural approach in this specification, it is shown that the restrictions on underlying well-behaved leisure-consumption preferences are rejected. More fundamentally still, the standard approach, i.e., the assumption of unitary households optimizing statically, is strongly rejected when tested against a general model with price- and income-dependent preferences. In a static environment, the result boils down to a rejection of the unitary model. Interestingly, restrictions from both structural and standard models also imply important discrepancies in estimated elasticities and simulated predictions of responses to a tax reform. In particular, large differences appear between standard models and the general model which possibly encompasses several interpretations including dynamic aspects and intrahousehold negotiation. These findings illustrate the difficulty to conduct policy analysis in a way which reconciles the best explanatory power and a framework consistent with economic theory. The general model we suggest may provide future research with an interesting setting to test some of the dimensions of household behavior.
    Keywords: multinomial logit, household labor supply, taxation, microsimulation, unitary model, collective model
    JEL: C25 C52 H31 J22
    Date: 2005–01
  5. By: Ugo Colombino (Department of Economics, University of Turin, Italy); Annamaria Nese (Department of Economics, University of Salerno, Italy); Patrizia Riganti (School of Architecture, Queen's University, Belfast, Northern Ireland)
    Abstract: This paper reports results from a survey using conjoint choice approach questions to elicit people’s preferences for cultural heritage management strategies for an outstanding world heritage site: the Temples of Paestum, in Italy. The potential of the above-mentioned methodologies’ within the current cultural heritage research scenario is also discussed.
    Keywords: Conjoint Analyis, Evaluation of Cultural Goods
    JEL: D6 D7 H
    Date: 2005–01–12
  6. By: Cristina Hernandez-Quevedo; Andrew M Jones; Nigel Rice
    Abstract: This paper explores reporting bias and heterogeneity in the measure of self-assessed health (SAH) used in the British Household Panel Survey (BHPS). The ninth wave of the BHPS includes the SF-36 general health questionnaire, which incorporates a different wording to the self-assessed health variable used at other waves. Considerable attention has been devoted to the reliability of SAH and the scope for contamination by measurement error; the change in wording at wave 9 provides a form of natural experiment that allows us to assess the sensitivity of panel data analyses to a change in the measurement instrument. In particular, we investigate reporting bias due explicitly to the change in the question. We show how progressively more general specifications of reporting bias can be implemented using panel data ordered probit and generalised ordered probit models. Our results suggest that the distribution of SAH does shift at the ninth wave but there is little evidence that this varies with socio-economic characteristics at an individual level.
    Keywords: self-assessed health; reporting bias; ordered probit; generalised ordered probit; panel data
    JEL: I12 C23

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