nep-dcm New Economics Papers
on Discrete Choice Models
Issue of 2010‒08‒21
two papers chosen by
Philip Yu
Hong Kong University

  1. Betit: A Family that Nests Probit and Logit By Wim P.M. Vijverberg
  2. Does Income Taxation Affect Partners’ Household Chores? By Soest, A.H.O. van; Stancanelli, E.G.F.

  1. By: Wim P.M. Vijverberg
    Abstract: This paper proposes a dichotomous choice model that is based on a transformed beta (or zâ€) distribution. This model, called betit, nests both logit and probit and allows for various skewed and peaked disturbance densities. Because the shape of this density affects the estimated relation between the dichotomous choice variable and its determinants, the greater flexibility of the transformed beta distribution is useful in generating more accurate representations of this relationship. The paper considers asymptotic biases of the logit and probit models under conditions where betit should have been used. It also investigates small sample power and provides two examples of applications that illustrative of the capability of the betit model. [IZA Discussion Paper No. 222]
    Keywords: Dichotomous choice model, beta distribution, logit, probit
    Date: 2010
  2. By: Soest, A.H.O. van; Stancanelli, E.G.F. (Tilburg University, Center for Economic Research)
    Abstract: We study the impact of income taxation on both partners‟ allocation of time to market work and unpaid house work in households with two adults. We estimate a structural household utility model in which the marginal utilities of leisure and house work of both partners are modelled as random coefficients, depending on observed and unobserved characteristics of the household and the two partners. We use a discrete choice model with choice sets of 2,401 points for each couple, distinguishing seven market work intervals and seven house work intervals for each partner. The model is estimated using data for France, which taxes incomes of married couples jointly, like, for instance, Germany and the US. We find that both partners‟ market and non-market time allocation decisions are responsive to changes in the tax system or other policy changes that change the financial incentives. Women‟s time allocation is more responsive to the own and the partner‟s wage rate than men‟s. Tax policy simulations suggest that moving from joint taxation for married couples to separate taxation of each spouse would go a small step in the direction of equalizing market and non-market work of spouses. Selective taxation with smaller tax rates for women than for men would magnify these effects.
    Keywords: time use;taxation;labour supply;discrete choice models
    JEL: J22 H31 C35
    Date: 2010

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