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on Discrete Choice Models |
| By: | Colombino, Ugo (Collegio Carlo Alberto) |
| Abstract: | Many microeconometric models of discrete labour supply include alternative-specific constants meant to account for (possibly besides other factors) the density or accessibility of particular types of jobs (e.g. part-time jobs vs. full-time jobs). The most common use of these models is the simulation of tax-transfer reforms. The simulation is usually interpreted as a comparative static exercise, i.e. the comparison of different equilibria induced by different policy regimes. The simulation procedure, however, typically keeps fixed the estimated alternative-specific constants. In this note we argue that this procedure is not consistent with the comparative statics interpretation. Equilibrium means that the number of people willing to work on the various job types must be equal to the number of available jobs. Since the constants reflect the number of jobs and since the number of people willing to work change as a response to the change in tax-transfer regime, it follows that the constants should also change. A structural interpretation of the alternative-specific constants leads to the development of a simulation procedure consistent with the comparative static interpretation. The procedure is illustrated with an empirical example. |
| Keywords: | alternative-specific constants, simulation of tax reforms, labour supply, discrete choice, random utility, equilibrium simulation |
| JEL: | C35 C53 H31 J22 |
| Date: | 2010–10 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp5262&r=dcm |
| By: | Berger F; Islam N; Liégeois P |
| Abstract: | In this study, the household labour supply is modelled as a discrete choice problem assuming that preference for leisure and consumption can be described by a quadratic utility function which allows for non-convexities in the budget set. We assess behavioural responses to the significant changes in the tax-benefit system during 2001-2002 in Luxembourg. Only moderate impact is found, on average, on the efficiency of the economy as measured by the labour supply effects. The impact is indeed concentrated on richer single women. These increase significantly their labour force, which more than doubles the non-behavioural effect of the tax reform on disposable income and boosts the gains in well-being for that part of population. |
| JEL: | C25 H24 H31 J22 |
| Date: | 2010–10–28 |
| URL: | http://d.repec.org/n?u=RePEc:ese:emodwp:em5/10&r=dcm |
| By: | Melina Barrio (Universidade de Santiago de Compostela); Maria Loureiro (Universidade de Santiago de Compostela) |
| Abstract: | Not much attention has been given to protest responses in choice experiments (CE). Using follow-up statements, we are able to identify protest responses and compute welfare estimates with and without the inclusion of such protest responses. We conclude that protest responses are fairly common in CE, and their analysis affects the statistical performance of the empirical models. In particular, when the sample is corrected by protests, our results come from utility consistent models. Thus, future choice experiments should consider the role of protest responses as contingent valuation studies have done. |
| Keywords: | Protest Responses, Choice Experiments |
| JEL: | Q01 Q10 Q50 |
| Date: | 2010–10 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2010.133&r=dcm |