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Center for Policy Research

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Full-Text Articles in Economics

Wrong Skewness And Finite Sample Correction, Qu Feng, William C. Horrace, Guiying Laura Wu Oct 2015

Wrong Skewness And Finite Sample Correction, Qu Feng, William C. Horrace, Guiying Laura Wu

Center for Policy Research

In parametric stochastic frontier models, the composed error is specified as the sum of a two-sided noise component and a one-sided inefficiency component, which is usually assumed to be half-normal, implying that the error distribution is skewed in one direction. In practice, however, estimation residuals may display skewness in the wrong direction. Model re-specification or pulling a new sample is often prescribed. Since wrong skewness is considered a finite sample problem, this paper proposes a finite sample adjustment to existing estimators to obtain the desired direction of residual skewness. This provides another empirical approach to dealing with the so-called wrong …

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Cointegration Of Matched Home Purchases And Rental Price Indexes –Evidence From Singapore, Badi Baltagi, Jing Li Oct 2015

Cointegration Of Matched Home Purchases And Rental Price Indexes –Evidence From Singapore, Badi Baltagi, Jing Li

Center for Policy Research

This paper exploits the homogeneity feature of the Singapore private residential condominium market and constructs matched home purchase price and rental price series using the repeated sales method. These matched series allow us to conduct time series analysis to examine the long-term present value relationship in the housing market. Three key findings are obtained. First, we fail to establish a cointegrating relationship between the home purchase price and rental price based on nationally estimated indexes. Second, area-specific indexes demonstrate strong cross-correlations, invalidating the use of first generation panel unit root tests that ignore these cross-correlations. Third, Pesaran’s CIPS test indicates …

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Estimating The Effects Of The Minimum Wage In A Developing Country: A Density Discontinuity Design Approach, Hugo Jales Oct 2015

Estimating The Effects Of The Minimum Wage In A Developing Country: A Density Discontinuity Design Approach, Hugo Jales

Center for Policy Research

This paper proposes a new framework to identify the effects of the minimum wage on the joint distribution of sector and wages in a developing country. I show that under reasonable assumptions, cross-sectional data on the worker's wage and sector can identify the joint distribution of the latent counterparts of these variables; that is, the sector status and wage that would prevail in the absence of the minimum wage. I apply the method in the “PNAD”, a nationwide representative Brazilian cross-sectional dataset for the years 2001 to 2009. The results indicate that the size of the informal sector is increased …

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The Renter Effect Part 3: Policy Implications, John Yinger Sep 2015

The Renter Effect Part 3: Policy Implications, John Yinger

Center for Policy Research

It’s Elementary is a series of essays on topics in education and education policy. The main focus is on education finance in New York State, but general research findings in education and education policy issues in several other states are also discussed. John Yinger, Professor of Economics and Public Administration at the Maxwell School, Syracuse University is the author of most of these essays, although a few are written by or co-authored with other scholars.

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Health, Medical Innovation And Disability Insurance: A Case Study Of Hiv Antiretroviral Therapy, Perry Singleton Sep 2015

Health, Medical Innovation And Disability Insurance: A Case Study Of Hiv Antiretroviral Therapy, Perry Singleton

Center for Policy Research

This study examines the effect of health on SSDI outcomes. The effect is identified by a new antiretroviral therapy to treat the human immunodeficiency virus. Administrative data on SSDI applications come from the Disability Research File. According to the analysis, the new therapy had an immediate and persistent effect on program entry. By 1997, the therapy decreased applications by 35.2 percent and new awards by 36.7 percent. Among existing beneficiaries, the therapy decreased program exits through death, but did not substantially increase program exits for work. By 1999, the therapy increased HIV-related expenditures by $43.6 million.

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Testing For Spatial Lag And Spatial Error Dependence In A Fixed Effects Panel Data Model Using Double Length Artificial Regressions, Badi H. Baltagi, Long Liu Sep 2015

Testing For Spatial Lag And Spatial Error Dependence In A Fixed Effects Panel Data Model Using Double Length Artificial Regressions, Badi H. Baltagi, Long Liu

Center for Policy Research

This paper revisits the joint and conditional Lagrange Multiplier tests derived by Debarsy and Ertur (2010) for a fixed effects spatial lag regression model with spatial auto-regressive error, and derives these tests using artificial Double Length Regressions (DLR). These DLR tests and their corresponding LM tests are compared using an empirical example and a Monte Carlo simulation.

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The Renter Effect Part 2: Evidence, John Yinger Aug 2015

The Renter Effect Part 2: Evidence, John Yinger

Center for Policy Research

It’s Elementary is a series of essays on topics in education and education policy. The main focus is on education finance in New York State, but general research findings in education and education policy issues in several other states are also discussed. John Yinger, Professor of Economics and Public Administration at the Maxwell School, Syracuse University is the author of most of these essays, although a few are written by or co-authored with other scholars.

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The Renter Effect Part 1: Explanation, John Yinger Jul 2015

The Renter Effect Part 1: Explanation, John Yinger

Center for Policy Research

It’s Elementary is a series of essays on topics in education and education policy. The main focus is on education finance in New York State, but general research findings in education and education policy issues in several other states are also discussed. John Yinger, Professor of Economics and Public Administration at the Maxwell School, Syracuse University is the author of most of these essays, although a few are written by or co-authored with other scholars.

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Still “Saving Babies”? The Impact Of Child Medicaid Expansions On High School Completion Rates, Lincoln H. Groves Jun 2015

Still “Saving Babies”? The Impact Of Child Medicaid Expansions On High School Completion Rates, Lincoln H. Groves

Center for Policy Research

Precipitated by the legislative decision to decouple child Medicaid benefits from welfare receipt, the number of young children qualifying for public health insurance grew markedly throughout the 1980s and early 1990s. From a baseline of roughly 15% in the average state at the beginning of the decade, the rate increased to more than 40% of all young children in the United States by the time all federal mandates were fully enacted in 1992. This paper extends the academic literature examining early childhood investments and longer-term human capital measures by exploring whether public health insurance expansions to low-income children led to …

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Averaged Instrumental Variables Estimators, Yoonseok Lee, Yu Zhou May 2015

Averaged Instrumental Variables Estimators, Yoonseok Lee, Yu Zhou

Center for Policy Research

We develop averaged instrumental variables estimators as a way to deal with many weak instruments. We propose a weighted average of the preliminary k-class estimators, where each estimator is obtained using different subsets of the available instrumental variables. The averaged estimators are shown to be consistent and to satisfy asymptotic normality. Furthermore, its approximate mean squared error reveals that using a small number of instruments for each preliminary k-class estimator reduces the finite sample bias, while averaging prevents the variance from inflating. Monte Carlo simulations find that the averaged estimators compare favorably with alternative instrumental-variable-selection approaches when the strength levels …

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Unequal Access To Good Schools In New York State, John Yinger Apr 2015

Unequal Access To Good Schools In New York State, John Yinger

Center for Policy Research

It’s Elementary is a series of essays on topics in education and education policy. The main focus is on education finance in New York State, but general research findings in education and education policy issues in several other states are also discussed. John Yinger, Professor of Economics and Public Administration at the Maxwell School, Syracuse University is the author of most of these essays, although a few are written by or co-authored with other scholars.

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Estimation Of Heterogeneous Panels With Structural Breaks, Badi Baltagi Mar 2015

Estimation Of Heterogeneous Panels With Structural Breaks, Badi Baltagi

Center for Policy Research

This paper extends Pesaran's (2006) work on common correlated effects (CCE) estimators for large heterogeneous panels with a general multifactor error structure by allowing for unknown common structural breaks. Structural breaks due to new policy implementation or major technological shocks, are more likely to occur over a longer time span. Consequently, ignoring structural breaks may lead to inconsistent estimation and invalid inference. We propose a general framework that includes heterogeneous panel data models and structural break models as special cases. The least squares method proposed by Bai (1997a, 2010) is applied to estimate the common change points, and the consistency …

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A Circuit Breaker For New York State?, John Yinger Mar 2015

A Circuit Breaker For New York State?, John Yinger

Center for Policy Research

It’s Elementary is a series of essays on topics in education and education policy. The main focus is on education finance in New York State, but general research findings in education and education policy issues in several other states are also discussed. John Yinger, Professor of Economics and Public Administration at the Maxwell School, Syracuse University is the author of most of these essays, although a few are written by or co-authored with other scholars.

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Estimation And Identification Of Change Points In Panel Models With Nonstationary Or Stationary Regressors And Error Term, Badi H. Baltagi, Chihwa Kao, Long Liu Jan 2015

Estimation And Identification Of Change Points In Panel Models With Nonstationary Or Stationary Regressors And Error Term, Badi H. Baltagi, Chihwa Kao, Long Liu

Center for Policy Research

This paper studies the estimation of change point in panel models. We extend Bai (2010) and Feng, Kao and Lazarová (2009) to the case of stationary or nonstationary regressors and error term, and whether the change point is present or not. We prove consistency and derive the asymptotic distributions of the Ordinary Least Squares (OLS) and First Difference (FD) estimators. We find that the FD estimator is robust for all cases considered.

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Adaptive Elastic Net Gmm Estimation With Many Invalid Moment Conditions: Simultaneous Model And Moment Selection, Mehmet Caner, Xu Han, Yoonseok Lee Jan 2015

Adaptive Elastic Net Gmm Estimation With Many Invalid Moment Conditions: Simultaneous Model And Moment Selection, Mehmet Caner, Xu Han, Yoonseok Lee

Center for Policy Research

This paper develops the adaptive elastic net GMM estimator in large dimensional models with many possibly invalid moment conditions, where both the number of structural parameters and the number of moment conditions may increase with the sample size. The basic idea is to conduct the standard GMM estimation combined with two penalty terms: the quadratic regularization and the adaptively weighted lasso shrinkage. The new estimation procedure consistently selects both the nonzero structural parameters and the valid moment conditions. At the same time, it uses information only from the valid moment conditions to estimate the selected structural parameters and thus achieves …

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Sources Of Productivity Spillovers: Panel Data Evidence From China, Badi H. Baltagi, Peter H. Egger, Michaela Kesina Dec 2014

Sources Of Productivity Spillovers: Panel Data Evidence From China, Badi H. Baltagi, Peter H. Egger, Michaela Kesina

Center for Policy Research

This paper assesses sources of productivity spillovers in China's electric and electronic manufacturing industry using a rich panel data-set of 25,360 firms observed over the period 2004-2007. This industry is characterized by its important reliance on technology. In particular, the paper focuses on the role of other firms' productivity as well as productivity shifters in affecting own firm-level total factor productivity. In addition, this paper examines the possible difference between spillovers from foreign-owned units and from units which participate at global markets through exporting in comparison to domestically-owned and non-exporting units. We find evidence of stronger spillovers from exporting firms …

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On Testing For Sphericity With Non-Normality In A Fixed Effects Panel Data Model, Badi H. Baltagi, Chihwa Kao, Bin Peng Dec 2014

On Testing For Sphericity With Non-Normality In A Fixed Effects Panel Data Model, Badi H. Baltagi, Chihwa Kao, Bin Peng

Center for Policy Research

Building upon the work of Chen et al. (2010), this paper proposes a test for sphericity of the variance-covariance matrix in a fixed effects panel data regression model without the normality assumption on the disturbances.

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Firm-Level Productivity Spillovers In China’S Chemical Industry: A Spatial Hausman-Taylor Approach, Peter H. Egger, Badi H. Baltagi, Michaela Kesina Dec 2014

Firm-Level Productivity Spillovers In China’S Chemical Industry: A Spatial Hausman-Taylor Approach, Peter H. Egger, Badi H. Baltagi, Michaela Kesina

Center for Policy Research

This paper assesses the role of intra-sectoral spillovers in total factor productivity across Chinese producers in the chemical industry. We use a rich panel data-set of 12,552 firms observed over the period 2004-2006 and model output by the firm as a function of skilled and unskilled labor, capital, materials, and total factor productivity, which is broadly defined. The latter is a composite of observable factors such as export market participation, foreign as well as public ownership, the extent of accumulated intangible assets, and unobservable total factor productivity. Despite the richness of our data-set, it suffers from the lack of time …

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Random Effects, Fixed Effects And Hausman’S Test For The Generalized Mixed Regressive Spatial Autoregressive Panel, Badi Baltagi, Long Liu Dec 2014

Random Effects, Fixed Effects And Hausman’S Test For The Generalized Mixed Regressive Spatial Autoregressive Panel, Badi Baltagi, Long Liu

Center for Policy Research

This paper suggests random and fixed effects spatial two-stage least squares estimators for the generalized mixed regressive spatial autoregressive panel data model. This extends the generalized spatial panel model of Baltagi, Egger and Pfaffermayr (2013) by the inclusion of a spatial lag dependent variable. The estimation method utilizes the Generalized Moments method suggested by Kapoor, Kelejian, and Prucha (2007) for a spatial autoregressive panel data model. We derive the asymptotic distributions of these estimators and suggest a Hausman test a la Mutl and Pfaffermayr (2011) based on the difference between these estimators. Monte Carlo experiments are performed to investigate the …

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Welfare Reform And Children’S Health, Badi H. Baltagi, Yin -Fang Yen Nov 2014

Welfare Reform And Children’S Health, Badi H. Baltagi, Yin -Fang Yen

Center for Policy Research

This study investigates the effect of the Temporary Aid to Needy Families (TANF) program on children’s health outcomes using data from the Survey of Income and Program Participation (SIPP) over the period 1994 to 2005. The TANF policies have been credited with increased employment for single mothers and a dramatic drop in welfare caseload. Our results show that these policies also had a significant effect on various measures of children’s medical utilization among low-income families. These health measures include a rating of the child’s health status reported by the parents; the number of times that parents consulted a doctor; and …

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Improving Public Health Safety Nets After An Economic Recession, Sanjay Basu Oct 2014

Improving Public Health Safety Nets After An Economic Recession, Sanjay Basu

Center for Policy Research

When we say ‘here’s what’s going on with our nation’s health,’ how do we know the answer? Where is the data coming from? How can we best evaluate our public health system? We’re talking about it every day on CNN given the Ebola scare. What do we mean by our ‘public health system’? I would argue that we should expand our definition to mean something more than hospitals and clinics, or doctors and nurses. In particular, I’ll argue that some of our non-health programs that we have as part of the safety net actually make a bigger health impact than …

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School Spending Matters!, John Yinger Aug 2014

School Spending Matters!, John Yinger

Center for Policy Research

It’s Elementary is a series of essays on topics in education and education policy. The main focus is on education finance in New York State, but general research findings in education and education policy issues in several other states are also discussed. John Yinger, Professor of Economics and Public Administration at the Maxwell School, Syracuse University is the author of most of these essays, although a few are written by or co-authored with other scholars.

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The Spatial Polish Wage Curve With Gender Effects: Evidence From The Polish Labor Survey, Badi H. Baltagi, Bartlomiej Rokicki Aug 2014

The Spatial Polish Wage Curve With Gender Effects: Evidence From The Polish Labor Survey, Badi H. Baltagi, Bartlomiej Rokicki

Center for Policy Research

This paper reconsiders the Polish wage curve using individual data from the Polish Labor Force Survey (LFS) at the 16 NUTS2 level allowing for spatial spillovers between regions. In addition it estimates the total and gender-specific regional unemployment rate elasticities on individual wages. The paper finds significant spatial unemployment spillovers across Polish regions. In addition, it finds that the results for the Polish wage curve are sensitive to gender-specific regional unemployment rates. This is especially true for women.

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The Final Verdict On Star?, John Yinger Jul 2014

The Final Verdict On Star?, John Yinger

Center for Policy Research

It’s Elementary is a series of essays on topics in education and education policy. The main focus is on education finance in New York State, but general research findings in education and education policy issues in several other states are also discussed. John Yinger, Professor of Economics and Public Administration at the Maxwell School, Syracuse University is the author of most of these essays, although a few are written by or co-authored with other scholars.

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Treatment Effects With Unobserved Heterogeneity: A Set Identification Approach, Sung Jae Jun, Yoonseok Lee, Youngki Shin Jul 2014

Treatment Effects With Unobserved Heterogeneity: A Set Identification Approach, Sung Jae Jun, Yoonseok Lee, Youngki Shin

Center for Policy Research

We propose the sharp identifiable bounds of the distribution functions of potential outcomes using a panel with fixed T. We allow for the possibility that the statistical randomization of treatment assignments is not achieved until unobserved heterogeneity is properly controlled for. We use certain stationarity assumptions to obtain the bounds. Dynamics in the treatment decisions is allowed as long as the stationarity assumptions are satisfied. In particular, we present an example where our assumptions are satisfied and the treatment decision of the present time may depend on the treatments and the observed outcomes of the past. As an empirical illustration …

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Test Of Hypotheses In A Time Trend Panel Data Model With Serially Correlated Error Component Disturbances, Chihwa Kao, Badi H. Baltagi, Long Liu Jul 2014

Test Of Hypotheses In A Time Trend Panel Data Model With Serially Correlated Error Component Disturbances, Chihwa Kao, Badi H. Baltagi, Long Liu

Center for Policy Research

This paper studies test of hypotheses for the slope parameter in a linear time trend panel data model with serially correlated error component disturbances. We propose a test statistic that uses a bias corrected estimator of the serial correlation parameter. The proposed test statistic which is based on the corresponding fixed effects feasible generalized least squares (FE-FGLS) estimator of the slope parameter has the standard normal limiting distribution which is valid whether the remainder error is I(0) or I(1). This performs well in Monte Carlo experiments and is recommended.

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The Graduation Rate Tragedy In New York State, John Yinger Jun 2014

The Graduation Rate Tragedy In New York State, John Yinger

Center for Policy Research

It’s Elementary is a series of essays on topics in education and education policy. The main focus is on education finance in New York State, but general research findings in education and education policy issues in several other states are also discussed. John Yinger, Professor of Economics and Public Administration at the Maxwell School, Syracuse University is the author of most of these essays, although a few are written by or co-authored with other scholars.

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Endogenous Network Production Functions With Selectivity, William C. Horrace, Xiaodong Liu, Eleonora Patacchini May 2014

Endogenous Network Production Functions With Selectivity, William C. Horrace, Xiaodong Liu, Eleonora Patacchini

Center for Policy Research

We consider a production function model that transforms worker inputs into outputs through peer effect networks. The distinguishing features of this production model are that the network is formal and observable through worker scheduling, and selection into the network is done by a manager. We discuss identification and suggest a variety of estimation techniques. In particular, we tackle endogeneity issues arising from selection into groups and exposure to common group factors by employing a polychotomous Heckman-type selection correction. We illustrate our method using data from the Syracuse University Men’s Basketball team, where at any point in time the coach selects …

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The Impact Of Education Finance Reform On Student Achievement In Massachusetts, John Yinger May 2014

The Impact Of Education Finance Reform On Student Achievement In Massachusetts, John Yinger

Center for Policy Research

It’s Elementary is a series of essays on topics in education and education policy. The main focus is on education finance in New York State, but general research findings in education and education policy issues in several other states are also discussed. John Yinger, Professor of Economics and Public Administration at the Maxwell School, Syracuse University is the author of most of these essays, although a few are written by or co-authored with other scholars.

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Identification And Estimation Of Outcome Response With Heterogeneous Treatment Externalities, Tiziano Arduini, Eleonora Patacchini, Edoardo Rainone Apr 2014

Identification And Estimation Of Outcome Response With Heterogeneous Treatment Externalities, Tiziano Arduini, Eleonora Patacchini, Edoardo Rainone

Center for Policy Research

This paper studies the identification and estimation of treatment response with heterogeneous spillovers in a network model. We generalize the standard linear-in-means model to allow for multiple groups with between and within-group interactions. We provide a set of identification conditions of peer effects and consider a 2SLS estimation approach. Large sample properties of the proposed estimators are derived. Simulation experiments show that the estimators perform well in finite samples. The model is used to study the effectiveness of policies where peer effects are seen as a mechanism through which the treatments could propagate through the network. When interactions among groups …

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