nep-dcm New Economics Papers
on Discrete Choice Models
Issue of 2007‒04‒14
five papers chosen by
Philip Yu
Hong Kong University

  1. Acyclic domains of linear orders : a survey By Bernard Monjardet
  2. Heterogeneity in dynamic discrete choice models By Martin Browning; Jesus Carro
  3. Dual Tracks: Part-time Work in Life-Cycle Employment for British Women By Sara Connolly; Mary Gregory
  4. Analysing welfare reform in a microsimulation-AGE model : the value of disaggregation By Arntz, Melanie; Boeters, Stefan; Gürtzgen, Nicole; Schubert, Stefanie
  5. Sick of work or too sick to work? Evidence on health shocks and early retirement from the BHPS By Nigel Rice; Jennifer Roberts; Andrew M. Jones

  1. By: Bernard Monjardet (CES - Centre d'économie de la Sorbonne - [CNRS : UMR8174] - [Université Panthéon-Sorbonne - Paris I])
    Abstract: Among the many significant contributions of Fishburn to social choice theory some have borne on what he has called «acyclic sets», i.e. these sets of linear orders where majority rule applies without «Condorcet effect» (majority relation never has cycles). Search for large such domains is a fascinating topic. I review the works in this field and in particular a recent one allowing to show the connections between some of them unrelated up to now.
    Keywords: Acyclic set, alternating scheme, distributive lattice, effet Condorcet, maximal chain, permutoedre lattice, weak Bruhat order, value restriction.
    Date: 2007–04–10
  2. By: Martin Browning; Jesus Carro
    Abstract: We consider dynamic discrete choice models with heterogeneity in both the levels parameter and the state dependence parameter. We first analyse the purchase of full fat milk using a long consumer panel (T > 100) on many households. The large T nature of the panel allows us to consistently estimate the parameters of each household separately. This analysis indicates strongly that the levels and the state dependence parameter are heterogeneous and dependently distributed. This empirical analysis motivates the theoretical analysis which considers the estimation of dynamic discrete choice models on short panels, allowing for more heterogeneity than is usually accounted for. The theoretical analysis considers a simple two state, first order Markov chain model without covariates in which both transition probabilities are heterogeneous. Using such a model we are able to derive small sample analytical results for bias and mean squared error. We discuss the maximum likelihood approach, a novel bias corrected version of the latter and we also develop a new estimator that minimises the integrated mean square error, which we term MIMSE. The attractions of the latter estimator are that it is very easy to compute, it is always identified and it converges to maximum likelihood as T becomes large so that it inherits all of the desirable large sample properties of MLE. Our main finding is that in almost all short panel contexts the MIMSE significantly outperforms the other two estimators in terms of mean squared error.
    Keywords: Unobserved Heterogeneity, Heterogeneous Slopes, Fixed Effects, Binary Choice, Panel Data
    JEL: C23
    Date: 2006
  3. By: Sara Connolly; Mary Gregory
    Abstract: Almost half the women in work in the UK work part-time, but views conflict: does this support a woman`s career or is it a dead-end trap? Cohort data on labour market involvement to age 42 show highly varied pathways through full/part-time/non-employment. Econometric estimation confirms that individual characteristics matter, but labour market history is particularly powerful. Part-time work serves two different functions. A history of full-time work even including spells in part-time or non-employment, tends to lead back to full-time work, so supporting a career. Part-time work combined with non-employment is unlikely to lead to full-time work, and is a trap.
    Keywords: Female Employment, Part-time Work, Persistence, Life-cycle, Dynamic Panel, Discrete Choice
    JEL: C23 C25 C33 C35 J16 J22 J62
    Date: 2007
  4. By: Arntz, Melanie; Boeters, Stefan; Gürtzgen, Nicole; Schubert, Stefanie
    Abstract: We present a combined, consistent microsimulation-AGE model that uses the labour market model PACE-L, data from the German Socio-Economic Panel and a discrete choice labour supply estimation. The model is used to analyse a reform that cuts the social assistance minimum income and lowers the transfer withdrawal rate in order to encourage labour force participation at the lower end of the wage distribution. We compare a disaggregated and an aggregated version of the model as well as a partial and a general equilibrium variant. It turns out that both disaggregation and general equilibrium feedback tend to mitigate the labour supply response to the reform proposal. While some labour supply indicators react quite sensitively to the level of aggregation, most macroeconomic variables are considerably more robust.
    Keywords: applied general equilibrium, discrete working time choice, labour market, wage bargaining, labour market reform, logit model, microsimulation
    JEL: D58 J22 J51
    Date: 2006
  5. By: Nigel Rice; Jennifer Roberts (Department of Economics, The University of Sheffield); Andrew M. Jones
    Abstract: We follow individuals as they retire using discrete-time hazard models applied to a stock sample from 12 waves of the British Household Panel Survey. Results confirm that health shocks are a determinant of retirement age and are quantitatively more important than pension entitlement. This is the case for both men and women and is observed for both a measure of health limitations and a measure of latent health status obtained from a generalized ordered probit model. Further, our results provide evidence that, for women, the health status of their partner impacts on their retirement decisions; an effect that is not evident for men.
    Keywords: Health, Retirement, Discrete-time duration models
    JEL: H55 I12 J26
    Date: 2007–01

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