nep-dcm New Economics Papers
on Discrete Choice Models
Issue of 2006‒04‒08
six papers chosen by
Philip Yu
Hong Kong University

  1. Birth Order and Sibship Sex Composition as Instruments in the Study of Education and Earnings By Gary-Bobo, Robert J.; Picard, Natalie; Prieto, Ana
  2. Fear of Floating and Fear of Pegging: An Empirical Analysis of De Facto Exchange Rate Regimes in Developing Countries By von Hagen, Jürgen; Zhou, Jizhong
  3. The Interaction Between Capital Controls and Exchange Rate Regimes: Evidence from Developing Countries By von Hagen, Jürgen; Zhou, Jizhong
  4. Labor Supply and Child Care Choices in a Rationed Child Care Market By Katharina Wrohlich
  5. Investigating Household Preferences for Kerbside Recycling Services in London: A Choice Experiment Approach By Katia Karousakis; Ekin Birol
  6. State Dependence in a Multi-state Model of Employment By Victoria Prowse

  1. By: Gary-Bobo, Robert J.; Picard, Natalie; Prieto, Ana
    Abstract: This paper presents an empirical study of birth-order and sibship sex-composition effects on educational achievement, and uses these variables as instruments to estimate returns to education, with the help of a rich set of individual data. Our sample includes more than 12,000 men and 10,000 women, who all left school in 1992, in France. The wages and educational achievements of individuals, as well as many aspects of family background, including birth order, number of sisters and brothers, are observed. An Ordered Probit model explains educational achievements. Sibship sex composition is shown to have an impact. Brothers and sisters have significant, non-negligible and different effects on educational achievement. A higher number of siblings has a negative effect in general, holding birth order constant, except when parents belong to the highest occupational groups; in other words, it is good to have many brothers and sisters if one's parents are well-to-do (the 'rich daddy effect'). On average, girls suffer significantly more from an additional brother than boys. Birth-order effects are both significant and substantial, even when many controls are included in the regressions. A high rank among siblings is detrimental for educational attainment (all other things equal), except in the case of fatherless children. Finally, a two stage method is used to estimate log-wage equations, taking care of education endogeneity, using birth order and the number of siblings as instruments. The OLS estimates of returns to education are biased downwards, when females are considered, but do not seem to be biased in the male sub-sample, given that many controls have been added in the wage equation.
    Keywords: birth order; earnings; education; family; siblings; sibship sex composition
    JEL: I2 J12 J16 J24
    Date: 2006–02
  2. By: von Hagen, Jürgen; Zhou, Jizhong
    Abstract: This paper uses a panel probit model with simultaneous equations to explain the joint determination of de facto and de jure exchange rate regimes in developing countries since 1980. We also derive an ordered-choice panel probit model to explain the causes of discrepancies between the two regime choices. Both models are estimated using simulation-based maximum likelihood methods. The results of the simultaneous equations model suggest that the two regime choices are dependent of each other and exhibit considerable state dependence. The ordered probit model provides evidence that regime discrepancies reflect an error-correction mechanism, and the discrepancies are persistent over time.
    Keywords: de facto exchange rate regimes; developing countries; simulated maximum likelihood; simultaneous equations model
    JEL: C35 F33 F41
    Date: 2006–03
  3. By: von Hagen, Jürgen; Zhou, Jizhong
    Abstract: The choice of the exchange rate regime and the capital account regime are among the core macro economic policy decisions for developing countries, with important repercussions for a country's macro economic stability, ability to attract foreign capital, and international trade. Existing literature has considered the determinants of these decisions, taking the capital account regime as given when considering the exchange rate regime and vice versa. This paper provides an empirical analysis of the interaction between the two regime choices treating both as simultaneously endogenous. Using a panel data set for developing countries in the 1980s and 1990s, we estimate a simultaneous-equations panel mixed logit model for the joint determination of both choices. We find strong influences from the official, de jure exchange rate regime on capital account policies, but only weak feedback effects. Using de-facto exchange rate regimes, the influences in both directions are similar to each other.
    Keywords: capital controls; exchange rate regimes; panel mixed logit model; simultaneous equations model
    JEL: C33 C35 F20 F33
    Date: 2006–03
  4. By: Katharina Wrohlich (DIW Berlin and IZA Bonn)
    Abstract: In this paper, I suggest an empirical framework for the analysis of mothers' labor supply and child care choices, explicitly taking into account access restrictions to subsidized child care. This is particularly important for countries such as Germany, where subsidized child care is rationed and private child care is only available at considerably higher cost. I use a discrete choice panel data model controlling for unobserved heterogeneity to simultaneously estimate labor supply and the demand for child care of German mothers with at least one child under the age of seven years. The model can be used to evaluate different kinds of policy reforms, such as changes in the availability or costs of child care. Results from the illustrating policy simulations show that targeting public expenditures at an extension of child care slots has greater effects on the demand for child care as well as on maternal employment than a reduction of parents' fees to existing slots.
    Keywords: child care, labor supply, discrete choice, panel study, Germany
    JEL: J22 J13 C35
    Date: 2006–03
  5. By: Katia Karousakis (Department of Economics, University College London, UK.); Ekin Birol (Department of Land Economy, University of Cambridge, UK.)
    Abstract: Recent developments in national and European Union waste management policy have prompted considerable interest into alternative waste management programmes, which could divert a portion of the municipal solid waste stream from landfills. One such alternative is recycling of household waste. This paper examines household preferences for kerbside recycling services and uses a stated preference choice experiment method to estimate households’ valuation of such services in monetary terms. Using a sample of 188 households in the London area, the empirical analysis yields estimates of the willingness to pay for the number of ‘dry’ materials collected, the collection of compost, textile collection and the frequency of collection.
    Keywords: Waste management; Recycling; Composting, Choice experiment; Preference heterogeneity
    Date: 2006
  6. By: Victoria Prowse (Nuffield College, Oxford University)
    Abstract: A multinomial choice framework is used to investigate the nature of women's transitions between full-time employment, part-time employment and non-employment. The stochastic framework allows time varying and time invariant unobserved preferences, and also controls for the possible endogenity of education, fertility and non-labor income. Significant positive true state dependence is found in both full-time and part-time employment. This finding is robust to the specification of unobserved preferences. The results are used the assess the dynamic effects of three temporary wage subsidies. All three policies have substantial effects on employment behavior for up to 6 years. However, obtaining a permanent increase in employment requires sustained or repeated interventions.
    Keywords: Dynamic labor supply, Heterogeneity, Multinomial choice, State dependence.
    JEL: C15 C35 J62
    Date: 2005–08–01

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