nep-dcm New Economics Papers
on Discrete Choice Models
Issue of 2017‒03‒12
four papers chosen by
Edoardo Marcucci
Università degli studi Roma Tre

  1. Labor Supply of Mothers: The Role of Time Discounting By Haan, Peter; Haywood, Luke
  2. On the Value of Birth Weight By Damian Clarke; Sonia Oreffice; Climent Quintana-Domeque
  3. Institutional Difference and FDI Location Choice: Evidence from China By Che, Yi; Du, Julan; Lu, Yi; Tao, Zhigang
  4. How do travellers respond to health and environmental policies to reduce air pollution? By Caroline Orset

  1. By: Haan, Peter; Haywood, Luke
    Abstract: We estimate a dynamic life-cycle model of labor supply with a focus on time preferences for women. We extend the dynamic discrete choice model to accommodate potentially non-exponential discounting. Variation in job protection regulations provides identifying variation to test time discounting, affecting future and not current payoffs. Reforms to job protection legislation in Germany constitute a natural experiment to identify the key time preference parameters of our model. We shed light on the importance of time-inconsistent preferences on maternal labor market return. The structure of time preferences will importantly affect cost and effectiveness of labor market policies.
    JEL: J24 D91 E24
    Date: 2016
  2. By: Damian Clarke (Universidad de Santiago de Chile); Sonia Oreffice (University of Surrey); Climent Quintana-Domeque (University of Oxford and St Edmund Hall)
    Abstract: A large body of evidence documents the educational and labor market returns to birth weight, which are reflected in investments in large social safety net programs targeting birth weight and early life health. However, there is no direct evidence on the private valuation of birth weight. In this paper we estimate the willingness to pay (WTP) for birth weight in the US. Using a series of discrete choice experiments, we find that individuals are, on average, willing to pay $1.44 for each additional gram of birth weight. This marginal WTP is particularly high at low birth weights, and turns negative at higher weights. The WTP among parents is higher than among non-parents, and particularly than those who do not plan to have children. Nonetheless, a series of calculations suggest that even the parental WTP for birth weight falls short of the inferred public WTP from large social safety net programs, and is lower than the expected present value of birth weight in the labor market for a US-born child. We present a parsimonious model which is able to explain the different WTP by parental status and the discrepancy between our estimated private valuation and the returns in the labor market: Parents may underestimate the value of birth weight, opening the door for new policy interventions to increase health at birth via informational campaigns.
    Keywords: discrete choice experiments, early life health, value of health, willingness to pay
    JEL: C90 I10 J13
    Date: 2017–03
  3. By: Che, Yi; Du, Julan; Lu, Yi; Tao, Zhigang
    Abstract: Rest upon an extensive data set on Foreign Invested Enterprises (FIEs) in China, we investigate the role of institutional difference in determining the locational choice of foreign direct investment (FDI). Estimation results using firm-level discrete choice model suggest that FIEs from source countries that are more remote institutionally from the Chinese mainland exhibit a higher degree of sensitivity toward regional economic institutions in their choice of FDI location. Furthermore, we find that FIEs coming from countries with better institutions than China are more sensitive to institutional difference. Interestingly, we find that the deterrent effct of institutional distance on FDI entry is mitigated for FIEs coming from countries with more ethnic Chinese in their overall populations.
    Keywords: Institutional Difference; FDI Location Choice; China
    JEL: F23 P16
    Date: 2017–02–26
  4. By: Caroline Orset
    Abstract: Despite the various measures taken to reduce air pollution in France, the French continue to use high emitting vehicles. We propose to evaluate the traveller's willingness to pay (WTP) for four means of transport: two high emitting vehicles (taxi diesel and personal diesel car) and two low-emission vehicles (rented electric vehicle and public transport). We get that individuals prefer personal cars. We propose different health and environmental policies to encourage people to adopt low-emission vehicles. Successive messages revealing the effects of air pollution on health and the environment are provided to individuals in a different order. We find that the information and order of information affect the WTP of individuals. This information campaign increases demand for low-emission vehicles, but demand for high emitting vehicles is somewhat affected. Indeed, individuals prefer to ignore information, they behave as in the theory of the tragedy of the commons. We then propose a system of tax subsidies and a standard subsidy system. These two policies drive individuals to switch from high emitting vehicles to low-emission vehicles. The regulator will have to choose between an incentive intervention (with a system of tax subsidies) and a coercive intervention (with a standard subsidy system).
    Keywords: Air Pollution; Information campaign; Mean of transport; Standard-subsidy system; Tax-subsidy system; Traveller's willingness to pay
    JEL: Q53 H23 I18
    Date: 2017–03–02

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