Estimation of household demand systems with theoretically compatible Engel curves and unit value specifications

We develop a method for estimation of price reactions using unit value data which exploits the implicit links between quantity and unit value choices. This allows us to combine appealing Engel curve specifications with a model of unit value determination in a way which is consistent with demand theory, unlike methods hitherto prominent in the literature. The method is applied to Czech data

Consumption and nutrition: age - intake profiles for Czechoslovakia 1989 - 1992

This paper provides non-parametric estimates of the relation between nutrient intake and age for Czechoslovak individuals, as a function of characteristics of both the individual and the household she lives in, on the basis of household purchases. Results show no significant difference between the age - energy intake profiles of men and women. The decomposition of this intake between carbohydrates, lipids (i.e. fats) and proteins shows a lack of balance in the diet in Czechoslovakia, but significant progress toward a more balance diet has taken place over the period. Finally, household characteristics such as the woman?s level of education, or household income, have at most a marginal impact on these profiles. --Nutrition,Household Budget Data,Demand Analysis,Penalised Least Squares

Comparison between unitary and collective models of household labor supply with taxation

Several recent papers have shown the relevance of collective models for the empirical investigation of household labor supply and consumption. Yet the estimation of collective models in the presence of non-linear budget sets and participation decisions remains a daunting task. This paper compares collective and unitary models on the basis of simulated collective data with income taxation. We distinguish the cases of individual and joint taxation. Estimating the unitary model we obtain strikingly different ?preference? parameters depending on the type of taxation. We also obtain substantial differences between predicted adjustments to labor supply following a switch between tax regimes, and hence potentially wide-ranging definitions of revenue-neutral versions of tax reforms. Finally we discuss distortions affecting the welfare analysis of reforms on the basis of unitary estimates when the model generating the data is a collective model. The results suggest that increased efforts should be devoted to the estimation of collective models with taxation. --Pareto optimal allocation,tax reform,simulated data

The aggregate Le Chatelier Samuelson principle with Cournot competition

This paper studies the aggregate substitution and expansion effects triggered by changes in input prices, in a context where firms supply a homogenous commodity and compete in quantities à la Cournot. We derive a sufficient condition for the existence of a Cournot equilibrium and show that this condition also ensures that the Le Chatelier-Samuelson principle is likely to be satisfied in the aggregate at the Cournot equilibrium, although it may not be satisfied at the firm level. These results are confirmed by the empirical findings obtained for two-digit US manufacturing industries, which also highlight the importance of imperfect competition for understanding aggregate growth, investment and employment. --Aggregation,returns to scale,market power,markup,own-price elasticity

Combining panel data and macro information: an application to the estimation of a participation model

When studying particular subgroups of a population, like for instance lone parents, the econometrician typically has few observations at hand. In such a situation, it is vital to take advantage of any valid complementary information that may be available. In this paper we illustrate, for the estimation of a participation model for lone mothers on data from the German Socio-Economic Panel 1984-1990, the relative benefits derived from using the panel structure of the data and from including macro information in the form of extra moments, as proposed by Imbens and Lancaster. The efficiency gains we find amount to having up to six times as many observations, 'and are shared almost equally between using the panel structure optimally and including macro information. --

On the performance of unitary models of household labor supply estimated on “collective” data with taxation

This paper compares collective and unitary models on the basis of simulated collective data with income taxation. We distinguish the cases of individual and joint taxation. Estimating a flexible unitary model, we obtain strikingly different “preference” parameters depending on the type of taxation. We also obtain substantial differences between predicted adjustments to labor supply following a switch between tax regimes. Our results show that even the design of revenue-neutral reforms may be heavily distorted by the use of a unitary model on collective data. Finally, we discuss distortions affecting the welfare analysis of reforms on the basis of unitary estimates when the model generating the data is a collective model. The results suggest that increased efforts should be devoted to the estimation of collective models with taxation.Pareto optimal allocations, policy evaluation, simulated data

Almost Consistent Estimation of Panel Probit Models with 'Small' Fixed Effects

We propose four different GMM estimators that allow almost consistent estimation of the structural parameters of panel probit models with fixed effects for the case of small T and large N. The moments used are derived for each period from a first order approximation of the mean of the dependent variable conditional on explanatory variables and on the fixed effect. The estimators differ w.r.t. the choice of instruments and whether they use trimming to reduce the bias or not. In a Monte Carlo study we compare these estimators with pooled probit and conditional logit estimators for different DGPs. The results show that the proposed estimators outperform these competitors in several situations. --Panel data,binary choice model,generalised method of moments,fixed effects

Estimation of household demand systems with theoretically compatible Engel curves and unit value specifications

We develop a method for estimation of price reactions using unit value data which exploits the implicit links between quantity and unit value choices. This allows us to combine appealing Engel curve specifications with a model of unit value determination in a way which is consistent with demand theory, unlike methods hitherto prominent in the literature. The method is applied to Czech data.Consumer demand, unit values

A model of the anchoring effect in dichotomous choice valuation with follow-up.

This paper focuses on modelling and estimating the starting point bias in closed-ended follow-up questions, where several bids are presented successively, depending on previous answers. Although the contingent valuation literature took off in the last decade, there is only one study modelling the starting point bias. We propose a new modelling of this anchoring effect based on the assumption the first proposed bid has a direct influence on the individual's willingness-to-pay, i.e respondents modify their willingness-to-pay when presented with the first bid just before they answer the first question. Monte Carlo results support the specification of our model. An application is provided based on data from a contingent valuation study conducted concerning air quality in Strasbourg.Contingent valuation, willingness-to-pay, binary-choice, anchoring effect.

A Simple Test of the Efficiency Wage Hypothesis Revisited

Gerlach and Stephan (1994) proposed a test based on the idea that the wage premium, the part of the wage which is not explained by the stock of human capital, should help predict variables such as career expectations (quit, change occupation, leave the labour force) and some job characteristics (like degree of supervision). We examine a number of issues related to sample selection and split, as well as the choice of tenure and experience variables, and obtain surprisingly robust results, which differ somewhat from theirs: in particular, we find no effect of the wage premium on career expectations. The main source of these differences appears to lie in the pooling of Germans and foreigners. --Efficiency wages,wage equations