Identifying Individual and Group Effects in the Presence of Sorting: A Neighborhood Effects Application

Researchers have long recognized that the non-random sorting of individuals into groups generates correlation between individual and group attributes that is likely to bias naïve estimates of both individual and group effects. This paper proposes a non-parametric strategy for identifying these effects in a model that allows for both individual and group unobservables, applying this strategy to the estimation of neighborhood effects on labor market outcomes. The first part of this strategy is guided by a robust feature of the equilibrium in vertical sorting models - a monotonic relationship between neighborhood housing prices and neighborhood quality. This implies that under certain conditions a non-parametric function of neighborhood housing prices serves as a suitable control function for the neighborhood unobservable in the labor market outcome regression. This control function transforms the problem to a model with one unobservable so that traditional instrumental variables solutions may be applied. In our application, we instrument for each individual’s observed neighborhood attributes with the average neighborhood attributes of a set of observationally identical individuals. The neighborhood effects model is estimated using confidential microdata from the 1990 Decennial Census for the Boston MSA. The results imply that the direct effects of geographic proximity to jobs, neighborhood poverty rates, and average neighborhood education are substantially larger than the conditional correlations identified using OLS, although the net effect of neighborhood quality on labor market outcomes remains small. These findings are robust across a wide variety of specifications and robustness checks.

Sorting, Education and Inequality

This paper examines the education literature through the lens of sorting. It argues that how individuals sort across neighborhoods, schools and households (spouses), can have important consequences for the acquisition of human capital and inequality. It discusses the implications of different education finance systems for sorting and analyzes the efficiency and welfare properties of these in static and dynamic frameworks.

Mexican migrants stay in border comfort zone

Limited access to migrant networks and strong geographic preferences may underlie border migrants' willingness to settle for lower wages on the border rather than seek higher wages by venturing into the U.S. interior.Immigrants ; Emigration and immigration ; Mexican-American Border Region - Economic conditions ; Wages

Discrete Choice with Social Interactions and Endogenous Memberships

This paper tackles the issue of self-selection in social interactions models. I develop a theory of sorting and behavior, when the latter is subject to social influences, extending the model developed by Brock and Durlauf (2001a, 2003) to allow for equilibrium group formation. Individuals choose a group, and a behavior subject to an endogenous social effect. The latter turns out to be a segregating force, and stable equilibria are stratified. The sorting process may induce, inefficiently, multiple behavioral equilibria. Such a theory serves as a means to solve identification and selection problems that may undermine the empirical detection of social effects on individual behavior. I exploit the theoretical model to build a nonlinear (in the social effect) selection correction term. Such a term allows identification, and solves the selection problem that arises when individuals can choose the group whose effect the researcher is trying to disentangle. The resulting econometric model, although relying on strict parametric assumptions, indicates a viable alternative when reliable instrumental variables are not available, or randomized experiments not possible.social interactions, neighborhood effects, sorting, self-selection, nested logit, identification of social effects

A semi-supervised approach to visualizing and manipulating overlapping communities

When evaluating a network topology, occasionally data structures cannot be segmented into absolute, heterogeneous groups. There may be a spectrum to the dataset that does not allow for this hard clustering approach and may need to segment using fuzzy/overlapping communities or cliques. Even to this degree, when group members can belong to multiple cliques, there leaves an ever present layer of doubt, noise, and outliers caused by the overlapping clustering algorithms. These imperfections can either be corrected by an expert user to enhance the clustering algorithm or to preserve their own mental models of the communities. Presented is a visualization that models overlapping community membership and provides an interactive interface to facilitate a quick and efficient means of both sorting through large network topologies and preserving the user's mental model of the structure. © 2013 IEEE

Grower Risk and Community Perception: Impediments to Growing Maine\u27s Aquaculture Industry

Maine has a long and proud history of working waterfronts and commercial fishing. However, in recent decades, aquaculture, or the harvesting or growing of aquatic life, has emerged as another player in the coastal economy. Globally, aquaculture is experiencing the fastest growth of any food sector in the world as it subsidizes floundering wild-capture fisheries (FAO, 2014). Maine and the rest of the United States have not yet participated in this growth, which has led stakeholders and policymakers like the National Oceanic and Atmospheric Administration (NOAA) to advocate for massive improvements to the sector by 2020 (NOAA, 2016). To ensure the possibility of sustainable growth, it is critical that the economic and social impediments are well understood. This thesis addresses two very different issues facing the aquaculture industry in Maine as it seeks to expand: the need for aquaculture growers to subsidize their income with off-farm labor and differences in community acceptance of aquaculture. Chapter 2 examines the proclivity of oyster growers in New England to participate in off-farm labor. Off-farm labor is considered to be an important risk-hedging strategy, especially in an industry where crop insurance is not yet available. Data is collected from a 2016 mixed-mode survey conducted by the University of Maine’s School of Economics across all oyster growers in Maine and Massachusetts (Scuderi & Chen, 2017). We explore how the growers’ personal, social, and business characteristics influence the likelihood of participating more or less in off-farm income generating activities. In addition, we borrow from a broad literature of agricultural off-farm labor supply studies to develop a framework for analyzing the off-farm labor decision specifically for aquaculture-based industries. The results indicate that a grower’s age, education, gender, business size, and experience all play an important role in determining participation in income generating activities on and off-farm. We also find that learning and information sharing within the aquaculture industry can decrease off-farm labor participation. These results can offer insights for policymakers by providing information about what grower characteristics influence their ability to work on-farm. Chapter 3 looks to examine community-level differences in acceptance of aquaculture across three coastal regions: Casco Bay, Damariscotta River region, and Penobscot Bay. Each region’s economy is composed of many stakeholder groups who hold heterogenous preferences over aquaculture. These groups compete for limited coastal space such that changes in the coastal landscape can change the distribution of winners and losers. We build off the work of Evans et al. (2017) that uses hedonic price analysis to look at the impacts of small changes in aquaculture production on the coastal landscape. This work is extended by acknowledging that some policymakers and stakeholders are interested in growing Maine’s aquaculture production in a nonmarginal fashion, a problem that requires a new set of tools to fully understand. A pure-characteristics equilibrium sorting model is utilized to investigate how observed large-scale changes in marine aquaculture might impact housing markets. A dataset composed of all coastal household transactions between 2012 and 2014 is used to investigate how coastal homeowners perceive aquaculture. Results show that relative changes in community price are induced when the utilization of coastal space changes. However, these results are muddied by an endogenous relationship between aquaculture and commercial fishing activities

Why stop there? Mexican migration to the U.S. border region

The transformation of the U.S. border economy since the 1980s provides a fascinating backdrop to explore how migration to the U.S-side of the Mexican border has changed vis-a-vis migration to the U.S. interior. Some long-standing patterns of border migrants remained unchanged during this period while others underwent drastic changes. For example, border migrants are consistently more likely to be female, to have migrated within Mexico, and to lack migrant networks as compared with migrants to the U.S. interior. Meanwhile, the occupational profile of border migrants has changed drastically from being predominately agricultural work to being largely made up of service-sector and sales-related work. Border migration is more sensitive to Mexican and U.S. business cycles than migration to the U.S. interior throughout the period and, while the data suggest border migrant wages may have caught up to other migrants' wages by the early 2000s, multivariate analysis indicates that border migrants who are female and/or undocumented continue to earn far less than such migrants who work in the U.S. interior.Emigration and immigration

Condorcet Domains, Median Graphs and the Single Crossing Property

Condorcet domains are sets of linear orders with the property that, whenever the preferences of all voters belong to this set, the majority relation has no cycles. We observe that, without loss of generality, such domain can be assumed to be closed in the sense that it contains the majority relation of every profile with an odd number of individuals whose preferences belong to this domain. We show that every closed Condorcet domain is naturally endowed with the structure of a median graph and that, conversely, every median graph is associated with a closed Condorcet domain (which may not be a unique one). The subclass of those Condorcet domains that correspond to linear graphs (chains) are exactly the preference domains with the classical single crossing property. As a corollary, we obtain that the domains with the so-called `representative voter property' (with the exception of a 4-cycle) are the single crossing domains. Maximality of a Condorcet domain imposes additional restrictions on the underlying median graph. We prove that among all trees only the chains can induce maximal Condorcet domains, and we characterize the single crossing domains that in fact do correspond to maximal Condorcet domains. Finally, using Nehring's and Puppe's (2007) characterization of monotone Arrowian aggregation, our analysis yields a rich class of strategy-proof social choice functions on any closed Condorcet domain