Parental Income and Continuing Education of Second Generation Immigrants in Sweden

Understanding the economic integration of minority ethnic communities requires an analysis of the educational process. This paper examines second‐generation immigrant youths’ educational attainments in comparison with those of similarly aged native Swedes. Binomial‐logit, grouped‐regression and multinomial‐logit models are applied to longitudinal data, 1991–1996. The results give evidence for socioeconomic determinants of post‐compulsory education and for parental influence on educational choices. Parental income affects second‐generation immigrants’ post‐compulsory education and Swedes’ choice of level of education. In general, the stronger the labour market positions of the parents, the higher the probability of the children continuing education. It is also found that the geographical origin of second‐generation immigrants matter, with youths of Asian origin having a higher probability of continuing their education. We suggest policy changes on different levels based on the evidence of the paper, as short‐run, long‐run and in general.     

What determines outstanding corporate debt mix? Evidence from fractional multinomial logit estimation

This study employs the fractional multinomial logit setting proposed by Papke and Wooldridge (1996) to examine factors driving the choice among nonbank private (144A) debt, bank loans and public debt made by 988 nonfinancial firms during 1993–2007. We document that the majority of firm-level factors have persistent effects on corporate outstanding debt mix across economic conditions. We also highlight the importance of macroeconomic variables on firms’ borrowing decisions as predicted by Diamond (1991). Finally, we document a substitution effect among debt financing sources due to credit rating downgrades, which is inconsistent with Rauh and Sufi (2010).     

Hidden Unemployment in Estonia: Experience from the Early Years of Transition (1989‐1996)

The aim of this article is to develop and deepen the discussion on this topic and analyse the methods of measuring hidden unemployment. This is important for giving an adequate overview of the situation of the labour market in Estonia and the scope of hidden unemployment and its development in the transition period. The following tasks are set to achieve this aim: to estimate different components of hidden unemployment in Estonia and to analyse the factors that influence this phenomenon in Estonia and thence form policy conclusions. In the analysis data from the Estonian Labour Force Survey (ELFS 97) carried out in 1997 are examined. Three logit models were calculated (for unemployed, underemployed and discouraged persons). The most important findings were that there are no general factors which could influence open and hidden unemployment at the same time, and that the factors influencing the components of hidden unemployment differ—underemployment is probably influenced more by economic factors and discouragement more by psychological factors.     

Mixed Logit Model Performance and Distributional Assumptions: Preferences and GM foods

Using mixed logit models to analyse choice data is common but requires ex ante specification of the functional forms of preference distributions. We make the case for greater use of bounded functional forms and propose the use of the Marginal Likelihood, calculated using Bayesian techniques, as a single measure of model performance across non nested mixed logit specifications. Using this measure leads to very different rankings of model specifications compared to alternative rule of thumb measures. The approach is illustrated using data from a choice experiment regarding GM food types which provides insights regarding the recent WTO dispute between the EU and the US, Canada and Argentina and whether labelling and trade regimes should be based on the production process or product composition. This paper draws work commissioned by UK Department of Environment Food and Rural Affairs (DEFRA). The views presented in this paper are those of the authors alone and should not be regarded as those of DEFRA or of individuals within DEFRA.     

Flexible customer willingness to pay for bundled smart home energy products and services

Energy markets are rapidly changing with smarter, connected, more reliable infrastructure and cleaner generation on the supply side, and more choice, greater control and enhanced flexibility for customers. This paper examines willingness to pay for bundled smart home energy products and information services, using data from a set of two discrete choice experiments that were part of a survey by the regional energy provider of upstate New York. To let the data reveal how preferences are distributed in the population, a logit-mixed logit model in willingness-to-pay space and a combination of observed and unobserved preference heterogeneity was specified and fitted. Results show that residents of Tompkins County are willing to pay more than in other counties for residential storage, and that for home energy management there is an important generational divide with millennials being much more likely to perceive the economic value in the smart energy technologies. The flexible logit-mixed logit estimates provide evidence of important heterogeneity in preferences: whereas most of the population has a positive—albeit rather low—valuation of smart energy products and services, there is a considerable percentage of customers with negative perceptions.     

The determinants of Latin American exchange rate regimes

The experience of the last thirty years suggests that a wide range of factors affects policymakers’ choice of exchange rate regime. The initial explanation was that changes in the international sphere dominated domestic policies and strongly influenced how governments decided among the trade-offs. More recently, domestic political factors’ influence on the choice of exchange rate regimes have been emphasized, providing detailed and rich insights into the dynamics of the choice. Neither approach has been entirely successful. Both internal and external factors must be taken into account. This article builds on previous empirical work and takes into account domestic and international influences on the choice of exchange rate regimes in Latin America between 1964 and 1996. In addition, we highlight a variety of ‘interactions’, choices of economic policy that are affected by both national and international pressures and that, in turn, influence the choice of exchange rate regime. The empirical model uses multinomial ordered logit analysis to determine the factors in exchange rate determination and to compare the explanatory of the models with and without the interaction variables.     

Higher education and public sector employment: evidence from Finnish data on twins

Using data from Finland on twins, this paper examines the effect of labour quality, as measured by education, on the choice to work in the public sector. A distinction to previous studies is made by allowing controls of family background and genetics effects that could drive the positive relationship between higher education and public sector employment. The conditional (fixed effects) logit regression estimates indicate that highly qualified employees are more likely to seek public sector employment. The paper also utilizes the longitudinal structure of the data to examine whether the results vary over time. These results indicate that the association between public sector work and higher education is counter-cyclical. In other words, highly qualified workers are more likely to hold public service positions and to have greater access to public sector jobs during economic downturns.     

Valuing Local Environmental Amenity with Discrete Choice Experiments: Spatial Scope Sensitivity and Heterogeneous Marginal Utility of Income

Using discrete choice experiments we examine preferences for the spatial provision of local environmental improvements in the context of regeneration policies. Amenities we consider are: improvements to areas of open space, recreation facilities and other public spaces; street cleanliness; restoration of derelict properties; and the provision of paths dedicated to cycling and walking. We include the spatial scope of the policy as an attribute, making the trade-off between environmental amenity and its spatial provision explicit. We employ a novel estimator for average willingness to pay (WTP) for mixed logit models with a random cost coefficient, which is robust to the presence of price insensitive respondents and performs well relative to mixed logit estimation in WTP space. We find that the spatial scope of the policy affects both the intensity and heterogeneity of preferences, and that these effects are of statistical and economic significance.     

The Effects of Changing Cost Vectors on Choices and Scale Heterogeneity

Choice Experiments (CE) are widely used to estimate the values of changes in non-market goods and services. A cost attribute is typically included in a CE questionnaire to enable the estimation of monetary values for changes in the non-market attributes presented. Notwithstanding the central importance of the cost attribute, relatively little research has been undertaken on the impacts of varying cost attribute levels on value estimates, or on individual heterogeneity. In this paper, I present results from mixed logit and generalised mixed logit models that account for unobserved idiosyncratic preference and scale heterogeneity. Respondents are found to anchor their choices on the relative cost levels presented in the survey with results suggesting that people are more sensitive to relative rather than absolute cost vectors. However, the higher cost levels do not lead to significantly higher value estimates, partly because of observed preference heterogeneity towards the environmental attributes. An important observation is that scale heterogeneity is important: accounting for scale— as well as preference—heterogeneity in the generalised mixed logit model leads to significantly improved model fit. The results indicate significant unobserved error variance across respondents, unrelated to whether a high or low cost vector is used.     

Business cycle duration dependence and foreign recessions

This study revisits business cycle duration dependence in G7 countries by controlling for foreign recessions, defined as the number of other G7 countries in a recession. Estimates from regime switching logit models show that the monthly likelihood of ending an expansion roughly doubles for every extra G7 country in recession, but the end of foreign recessions do not affect the ending of recessions. They also show that recessions are duration dependent in all G7 countries, but expansions only in the United States and Germany. The economic importance of foreign recessions and duration in driving business cycle phase changes vary across countries.     

An Economic Analysis of Yard Care and Synthetic Chemical Use: The Case of San Francisco

Yard care is an economically important household production activity that also has potentially significant environmental or health impacts. Of particular concern are the possible negative impacts of using synthetic pesticides and fertilizers. But economic models and empirical analyses of yard care and chemical use are rare. We develop a simple model of household production and consumption to analyze yard care and chemical use. We then estimate a multinomial logit model of these behavioral choices with household data from San Francisco. Attitudes towards the quality of one's outdoor residential environment and time scarcity are important determinants of the odds of chemical use whereas financial variables play the major role in determining the odds that people have and care for yards. These results could help to improve educational or marketing campaigns that aim to reduce potential or actual problems associated with yard chemical use. Better data for models similar to this one are needed for future research.     

Accounting for Preference and Scale Heterogeneity in Establishing Whether it Matters Who is Interviewed to Reveal Household Automobile Purchase Preferences

The choice of automobile purchases in households often involves participation of more than one household member, each of which exerts some degree of influence on the final choice outcome. The influence of more than one agent has been recognised for many years, and yet the majority of automobile choice studies develop choice models as if a single agent is involved in the preference revelation process. What is not clear is whether it makes any substantive difference in preference revelation according to who is interviewed in a household. Using a generalised mixed logit framework that accounts for preference and scale heterogeneity, we estimate a series of models to investigate whether there are significant differences between the preferences of each individual in a household when assessed in isolation from other household members, as well as their joint preferences when expressing their preferences through a group choice task. The context is choosing amongst petrol, diesel and hybrid fuelled vehicles (associated with specific levels of fuel efficiency and engine capacity) when faced with a mix of vehicle prices, fuel prices, fixed annual registration fees, annual emission surcharges and vehicle kilometre emission surcharges. Using a stated choice experiment, we find that sampling a single individual as a representative of the household’s preferences is less appropriate than utilising preference information from the relevant group of decision makers in the household.     

TESTING THE SEQUENTIAL LOGIT MODEL AGAINST THE NESTED LOGIT MODEL*

In this paper, we show that the sequential logit (SL) model, in which a choice process is characterized as a sequence of independent multinomial logit models, is a limiting case of the nested logit (NL) model. For testing the SL model against the NL model, we propose Wald, likelihood ratio and Lagrange multiplier tests after suitably reparameterizing the NL model. It is found that when the NL model parameters are “weakly identified”, the Wald test severely underrejects the true model, whereas the sizes of the LR and LM tests are not significantly affected.     

Peer effects in medical school

Using data on the universe of students who graduated from US medical schools between 1996 and 1998, we examine whether the abilities and specialty preferences of a medical school class affect a student's academic achievement in medical school and his choice of specialty. We mitigate the selection problem by including school-specific fixed effects, and show that this method yields an upper bound on peer effects for our data. We estimate positive peer effects that disappear when school-specific fixed effects are added to control for the endogeneity of a peer group. We find no evidence that peer effects are stronger for blacks, that peer groups are formed along racial lines, or that students with relatively low ability benefit more from their peers than students with relatively high-ability. However, we do find some evidence that peer groups form along gender lines.     

Modelling preference heterogeneity for theatre tickets: a discrete choice modelling approach on Royal Danish Theatre booking data

This article analyses the behavioural choice for theatre tickets using a rich data set for 2010–2013 from the sale system of the Royal Danish National Theatre. A consumer who decides to attend a theatre production faces multiple sources of price variation that involves a choice by the consumer among different ticket alternatives. Three modelling approaches are proposed in order to model ticket purchases: conditional logit with socio-demographic characteristics, nested logit and latent class. These models allow us explicitly to take into account consumers’ preference heterogeneity with respect to the attributes associated with each ticket alternative (quality of the seat and day of the performance). In addition, the willingness to pay of choice attributes is estimated. Final results suggest that customers’ characteristics in terms of age and frequency of theatre attendance characterize different patterns of behaviour in the choice of theatre ticket.     

Comparison of Internet and interview survey modes when estimating willingness to pay using choice experiments

With the increasing use of the Internet as a survey mode, questions of mode effects and how potential effects influence inferences arise. Using a choice experiment combined with mixed logit estimation, willingness-to-pays (WTPs) for attributes are compared between the Internet mode and the more traditional interview survey mode. The results suggest that there are differences in WTP between the two survey models for three of four attributes. Furthermore, WTPs obtained from the interview survey are larger than the WTPs obtained from the Internet survey, suggesting potential social desirability behaviour by the interview respondents. Internet surveys involving sensitive issues may be desirable because of potential social desirability behaviour.     

A Nested logit approach to modelling the location of foreign direct investment in the Central and Eastern European Countries

This paper applies the Nested logit model to a three-level dataset in order to examine the factors explaining foreign investment location decisions into 13 Central and Eastern European Countries (CEECs) over an eleven-year period between 1997 and 2007. The three-level dataset allows firm, industry and country factors to simultaneously determine the firm-level investment location decisions. The Nested logit model partially relaxes the assumption of the independence from irrelevant alternatives and tests if national boundaries affect the choice of investment location of multinational enterprises in the CEECs. In addition, the Heteroskedastic Extreme Value model is used to help identify an appropriate nesting structure. Empirical results show that the responsiveness of the firms' decision regarding where to locate capital in the CEECs to country-level variables differs both across sectors and across firms of different sizes and profitability.     

The effects of cognitive ability and high school quality on college entry decisions: nonparametric estimation of parameters of interest

The decisions to attend college are analysed and nonparametric predictions compared to those obtained from the widely used logit model. The impacts of measured cognitive ability and proxies for high school quality on the decisions to attend college are examined for a sample of white and black males and females from the USA. Two different parameters of interest which isolate the effects of ability and high school quality on college entry decisions are described and estimated by ‘integrating out’ the effect of other covariates. It is found that measured cognitive ability is an extremely important determinant of college entry for all race and gender groups. At the same point in the ability distribution, blacks are more likely to select into college than whites, and females more likely than males of the same racial group. Proxies for high school quality such as teacher education, student teacher ratios, school enrolment and library size are shown to have little or no effects on the likelihood of college entry for all race and gender groups. Further, predictions obtained from the flexible nonparametric analysis are found to be quite similar to those obtained from the logit model, suggesting that simpler fully parametric binary choice models perform quite well as modelling college entry decisions.     

Low-income fishermen's willingness-to-pay for fisheries and watershed management: An application of choice experiment to Lake Tana,Ethiopia

In this paper, choice experiment was applied for valuation of Lake Tana's fishery and watershed. Two attributes — fishing control and lake side plantation — were identified as relevant attributes for the choice experiment. A monetary attribute — payment for fishing permit was also included. Multinomial and random parameter logit models were used for estimation. All the attributes included were significant factors in affecting the probability of choosing an alternative scenario. The results suggest that fishermen were more concerned about fishing control as reflected by the higher value they give to fishing control than lake side plantation. Household income, years of education, and family size were found to be significant. The economic welfare measures we calculated for two scenarios show that fishermen were willing to pay 57 birr (US$5.3)) per month for a moderate improvement scenario and 93 birr (US$8.6) per month for an aggressive scenario for the two attributes.     

Preferences and demand for local public spending

In this paper we present logit estimation results for individual demand equations for local public spending. Our data are derived from a large-scale survey, organized by a Belgian municipality. Respondents were informed that the results of the survey would influence actual decisions and the questions covered very specific projects and their immediate tax consequences. Sociological variables are dominant in the explanation of the willingness-to-pay for specific projects, while the explanatory value of income is limited. We also analyse the global choice between public and private spending: here income and education are the most important variables, and both have a positive effect on the demand for public spending. Fiscal ignorance is widespread but does not lead to a higher demand for public spending.