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on Discrete Choice Models |
| By: | John K. Dagsvik, Torbjørn Hægeland and Arvid Raknerud (Statistics Norway) |
| Abstract: | In this paper we develop likelihood based methods for statistical inference in a joint system of equations for the choice of length of schooling and earnings. The model for schooling choice is assumed to be an ordered probit model, whereas the earnings equation contains variables that are flexible transformations of schooling and experience, with corresponding coefficients that are allowed to be heterogeneous across individuals. Under the assumption that the distribution of the random terms of the model can be expressed as a particular finite mixture of multinormal distributions, we show that the joint probability distribution for schooling and earnings can be expressed on closed form. In an application of our method on Norwegian data, we find that the mixed Gaussian model offers a substantial improvement in fit to the (heavy-tailed) empirical distribution of log-earnings compared to a multinormal benchmark model. |
| Keywords: | Schooling choice; earnings equation; normal mixtures; treatment effects; self-selection; random coefficients; full information maximum likelihood |
| JEL: | C31 I20 J30 |
| Date: | 2008–12 |
| URL: | http://d.repec.org/n?u=RePEc:ssb:dispap:567&r=dcm |
| By: | Luigi Marengo; Simona Settepanella |
| Abstract: | Marengo and Pasquali (2008) present a model of object construction in majority voting and show that, in general, by appropriate changes of such bundles, different social outcomes may be obtained. In this paper we extend and generalize this approach by providing a geometric model of individual preferences and social aggregation based on hyperplanes and their arrangements. As an application of this model we give a necessary condition for existence of a local social optimum. Moreover we address the question if a social decision rule depends also upon the number of voting agents. More precisely: are there social decision rules that can be obtained by an odd (even) number of voting agent which cannot be obtained by only three (two) voting agent? The answer is negative. Indeed three (or two) voting agent can produce all possible social decision rules. |
| Keywords: | Social choice; object construction power; agenda power; intransitive cycles; arrangements; graph theory. |
| JEL: | D71 D72 |
| URL: | http://d.repec.org/n?u=RePEc:ssa:lemwps:2008/28&r=dcm |
| By: | Bauer, Thomas (RWI Essen); Schmidt, Christoph M. (RWI Essen) |
| Abstract: | Using data on the valuation of Christmas gifts received by students in different fields at a German university, we investigate whether the endowment effect differs between students of economics and other respondents and whether it varies with the market price of the object under consideration. Our estimation results suggest that economics students have both, a significant lower WTP and WTA, indicating that existing studies on the efficiency loss of holiday gifts and experimental studies on the endowment effect that rely on data from economics students may be biased. The result further indicates that the endowment effect is independent of the market price of the object. |
| Keywords: | loss aversion, endowment effect, Christmas presents, deadweight loss |
| JEL: | D01 D49 D61 |
| Date: | 2008–11 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3855&r=dcm |
| By: | Raquel Carrasco (Departamento de Economía, Universidad Carlos III de Madrid); José Ignacio García Pérez (Department of Economics, Universidad Pablo de Olavide) |
| Abstract: | This paper studies whether the unemployment dynamics of immigrants differ from those of natives, paying special attention to the impact of accounting for unobserved heterogeneity among individuals. Using a large administrative data set for Spain, we estimate multiple-spell discrete duration models which disentangle unobserved heterogeneity from duration dependence. Specifically, we estimate random effects models assuming that the distribution of the effects is discrete with finite support, and fixed effects models in which the distribution of the unobserved effects is left unrestricted. Our results show the importance of accounting for unobserved heterogeneity and that mistaken policy implications can be derived due to improper treatment of unmeasured variables. We find that lack of control for unobserved heterogeneity leads to the conclusion that immigrant males have a higher probability of leaving unemployment than natives and that the negative effect of unemployment benefits for immigrants lasts longer than for natives. Nonetheless, the estimates which do control for unobserved heterogeneity show the opposite results. |
| Keywords: | Duration models; Discrete choice; Multiple spells; Unobserved heterogeneity; Unemployment; Immigration. |
| JEL: | J64 J61 C23 C41 J65 |
| Date: | 2008–12 |
| URL: | http://d.repec.org/n?u=RePEc:pab:wpaper:08.13&r=dcm |