Evangelos M. Falaris

A nested logit migration model with selectivity.

The author specifies a multiple discrete-choice migration model with a correction for selectivity in wage equations, and applies a less restrictive technique for modeling multiple discrete choices than in previous studies of migration. The author estimates the model using Venezuelan microdata, and finds evidence of positive selection in some state wage equations. This suggests that migration decisions are made according to the principle of comparative advantage. Evidence is also found of unobserved similarities between some states of Venezuela such that individuals regard them as neither perfectly distinct nor perfect substitutes. Copyright 1987 by Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.

Survey Attrition and Schooling Choices

We use data from three cohorts of the National Longitudinal Surveys of Labor Market Experience and from the Panel Study of Income Dynamics to study the effect of survey attrition on estimates of statistical models of schooling choices. We estimate regressions using data on people who always respond to the surveys (stayers) and on people who miss some surveys (attritors) and test whether the same statistical model describes the behavior of stayers and attritors. In general (with a few exceptions) we find that attrition either has no effect on the regression estimates or only affects the estimates of the intercept (and sometimes the coefficients of birth year dummies) and does not affect estimates of family background slope coefficients.

Financial System Development and Economic Growth in Transition Economies:New Empirical Evidence from the CEE and CIS Countries

ABSTRACT We examine the role of financial development in economic growth in the former Communist countries of Central and Eastern Europe and the Commonwealth of Independent States during the first two decades since the beginning of transition. These countries, which had undeveloped financial systems under Communism, provide an interesting test of the relationship between financial development and growth. Our study is the broadest in terms of coverage and time period. We find that measures of financial market efficiency and competitiveness are more important than the size of the market in terms of promoting economic growth.

Migration and Wages of Young Men.

We specify a two-period nested logit migration model with selectivity. We estimate the model using a sample of young male workers and study their choices among the nine U.S. census divisions during the first two years after leaving fulltime schooling. We find evidence of the existence of unobserved similarities in the divisions within each census region. We find that locational choices in one period affect locational choices of individuals in subsequent periods. We test for selectivity in division-specific wage equations and find little evidence of selectivity in the wage equations of most divisions and evidence of negative selection in the wage equations of two divisions.

A Quantile Regression Analysis of Wages in Panama

Differences in the effects of worker characteristics on wages in Panama at different points of the conditional wage distribution are investigated. Public sector employment increases wages relatively more at lower quantiles. Within the public sector, employment in that sector increases wages of the median worker and reduces wage inequality. Presence of a labor union increases relatively more private sector wages at lower quantiles. Unions reduce wage inequality within the union private sector and increase average wages within that sector. In the public sector, the presence of a labor union increases wages of men at lower quantiles at a lower rate than in the private sector. Self-employment decreases wages at lower quantiles and increases wages at higher quantiles. Urban location affects wages in a U-shaped pattern as one moves from lower to higher quantiles. Rates of return to experience are higher for men at higher quantiles. Experience increases mens wage inequality.

The Determinants of Internal Migration in Peru: An Economic Analysis

The process of economic development is associated with substantial internal migratory movements. As per capita income increases the proportion of a countrys labor force in agriculture decreases while the proportion in industry and services increases. Since the industrial and service sectors tend to be concentrated around a few urban centers and considering that urban birthrates are generally lower than rural birthrates these shifts in the allocation of the labor forces among sectors of the economy have to come through migration especially from rural to urban areas. These migration flows are considered to have important effects upon several problems of the development process such as employment or regional development so an increased understanding of the determinants of migration can aid the formulation of development policies. Economic theories of human migration view the process as a purposeful response to differences in economic opportunities between regions. In this paper an economic model of migration is outlined and used to investigate the determinants of internal migration with data from Peru for 1961. (excerpt)

Schooling Choices and Demographic Cycles

This paper examines the effect of demographic cycles on schooling choices and the timing of school completion. Utilizing data from the National Longitudinal Surveys of Labor Market Experience and from the Panel Study of Income Dynamics, we find that men and women born during the upswing of a demographic cycle obtain more schooling and take longer to finish a year of schooling than comparable individuals born during the downswing of a demographic cycle. The patterns that we document are more complex than would be predicted by any of the theoretical models of educational responses to demographic cycles that have been presented in the literature.

The Role of Selectivity Bias in Estimates of the Rate of Return to Schooling: The Case of Married Women in Venezuela

Introduction The average rate of return to education typically has been found to be higher in developing than in developed countries. In developing countries this rate of return has also been found to be much higher for women than for men.1 One way of estimating rates of return is by estimating the coefficients of education of semilogarithmic wage equations. Such wage equations are also useful in the study of wage differences between groups of people and for other purposes, such as imputing wages to nonworkers. Some of the samples, such as those of married women, that can be used to estimate wage equations are censored, and in these cases it is important to test and correct for sample selectivity. Most studies that report estimates of female wage equations with data for highincome countries make these corrections routinely.2 Studies based on data from middleor low-income countries, however, usually ignore sample selectivity.3 For example, the rates of return to education for women reported by George Psacharopoulos are based on wage equations that ignore sample selectivity.4 A natural question, which arises in light of the absence of selectivity corrections in most previous estimates of female wage equations for developing countries, is whether the very high estimated rates of return to education for women in these countries are reliable or are a statistical illusion. In other words, is female education in developing countries as attractive an investment as previous studies suggest? This article provides an answer for a middle-income country, Venezuela, by reporting estimates of wage equations for married women while controlling for sample selectivity. When sample-selectivity-corrected wage equations are estimated, it is important to verify that these equations are correctly specified,

Child Schooling, Child Health, and Rainfall Shocks: Evidence from Rural Vietnam

Abstract We study the effect of rainfall shocks on child schooling outcomes and on standardised height for age (a measure of child health) in rural Vietnam. We find that adverse rainfall shocks during pregnancy adversely affect children’s school entry delay and progress through school. Adverse rainfall shocks in the third year of life adversely affect both schooling and child health. These effects differ by region, as a result of constraints that reflect regional economic heterogeneity. We predict that policies that help rural families smooth income shocks will result in increases in human capital and in substantial cumulative returns over a worker’s working life.

Misclassification of the Dependent Variable in Binary Choice Models: Evidence from Five Latin American Countries

Misclassification of the dependent variable in binary choice models can result in inconsistency of the parameter estimates. I estimate probit models that treat misclassification probabilities as estimable parameters for three labour market outcomes: formal sector employment, pension contribution and job change. I use Living Standards Measurement Study (LSMS) data from Nicaragua, Peru, Brazil, Guatemala and Panama. I find that there is a significant misclassification in 11 of the 16 cases that I investigate. If misclassification is present but is ignored, estimates of the probit parameters and their SEs are biased toward zero. In most cases, predicted probabilities of the outcomes are significantly affected by misclassification of the dependent variable. Even a moderate degree of misclassification can have substantial effects on the estimated parameters and on many of the predictions.