Jeanette Lye

Alcohol consumption, smoking and wages

The good health of an individual is a combination of uncontrollable factors that includes genetics and random events and controllable factors through the regulation of activities such as smoking and drinking. Since the work of Grossman in the 1970s, a significant relationship between health and earnings has been predicted. In this present paper the 1995 Australian National Health Survey is used to examine simultaneously the effects of drinking and smoking on wages. To model the interaction of smoking with alcohol consumption separate models are fitted for smokers and nonsmokers. These models account for potential selectivity bias resulting from the decision to smoke, and endogeneity arising from a potential causal relationship between earnings and alcohol consumption.

An Estimate of the Range of Equilibrium Rates of Unemployment for Australia

This paper estimates the range of equilibrium rates of unemployment for Australia. The estimation technique nests a unique equilibrium rate of unemployment as a special case. It is found for the period 1965-97 that a range of equilibria of at least 6.6 percentage points of unemployment exists in Australia. The lower limit of this range, which is the minimum rate of unemployment consistent with nonincreasing inflation, was 2-3 per cent in the 1960s, jumped in the early 1970s and was about 5.6 per cent during the 1990s. Copyright 2001 by The Economic Society of Australia.

Matching and Mobility in the Market for Australian Rules Football Coaches

This study examines matching effects as a determinant of mobility in the market for Australian Rules football coaches between 1931 and 1994. Among other results, the authors find direct evidence of a coach-team match-specific effect on team performance. One implication is that two teams might both significantly improve their performance by switching coaches, depending on the specific team and coach characteristics.

Computer knowledge and earnings: evidence for Australia

This paper uses data on wage and salary workers in Australia in 1993 to examine the relation between computer knowledge and earnings. A unique feature of the data set that is used is detailed information on the types and levels of computer skills possessed by individual workers. The main objectives of the study are to contribute to understanding the magnitude and sources of the relation between computer knowledge and earnings. Similar to existing research it is found that there is a large and significant return to computer knowledge, but that the magnitude of the return is substantially reduced in regressions that include detailed occupation controls. Using the detailed information on workers’ computer skills the main finding is that earnings are significantly positively related to the number of types of skills and average level of skills possessed by a worker.

Alcohol Consumption and Human Capital: A Retrospective Study of the Literature

Grossman proposed an individuals health can be viewed as one aspect of their human capital. Following this line of thought a number of recent papers have reported a positive impact of alcohol consumption on earnings. The rationale for the existence of such a relationship is the positive impact of alcohol on physical and mental health. We conduct a meta-analysis to determine whether such factors as: the estimation technique, the presence of ex-drinkers in the sample, possible sample selection bias and publication bias may all contribute to these findings. An additional suggestion for the positive relationship between alcohol and wages is the presence of a common set of personality traits that determines drinking behaviour and also leads to higher earnings. We examine this relationship by reviewing the literature that investigates if the personality influencing aspects of alcohol consumption influences measures of human capital. We also survey the significant body of research that has examined how alcohol consumption has been found to influence educational outcomes and the work force participation of problem drinkers.

The distribution of exchange rate returns and the pricing of currency options

An empirical model of the distribution of exchange rate returns based on a combination of the generalized Student t distribution and conditional variance specifications, is formulated and estimated for four daily bilateral exchange rates over the period 1984 to 1991. The empirical results show that the stylized characteristics of exchange rate returns such as volatility clustering, leptokurtosis and skewness, are consistently captured by this model, in contrast with other model specifications based on more restrictive distributional assumptions. Implications of the analysis are also investigated for the pricing of currency options, including comparisons with Black–Scholes prices.

A Non-linear Model of the Real US-UK Exchange Rate

This paper provides a framework for building and estimating non-linear real exchange rate models. The approach derives the stationary distribution from a continuous time error correction model and estimates this by MLE methods. The derived distribution exhibits a wide variety of distributional shapes including multimodality. The main result is that swings in the US/UK rate over the period 1973:3 to 1990:5 can be attributed to the distribution becoming bimodal with the rate switching between equilibria. By capturing these changes in the distribution, the non-linear model yields improvements over the random walk, the speculative efficiency model, and Hamiltons stochastic segmented trends model. Copyright 1996 by John Wiley & Sons, Ltd.

A Geometric Comparison of the Delta and Fieller Confidence Intervals

The comparison of the Delta and Fieller confidence intervals for the ratio of parameters estimated by normally distributed random variables has long been of interest. Our contribution is the construction of a common geometric representation of both the Delta and Fieller intervals defined by two related constrained extrema problems that are subject to a common constraint. The diagrammatic solution to these problems can be used to examine how earlier comparisons based on alternate analytic relationships and simulations have resulted in the particular conclusions they report. We find that the degree to which the Delta and Fieller intervals coincide depends not only on the univariate statistics for the estimated parameters, but also on the agreement of the sign of their estimated correlation and the ratio of estimated parameters. This article has supplementary material online.

A Reinterpretation of Interactions in Regressions

Regression specifications in applied econometrics frequently employ regressors that are defined as the product of two other regressors to form an interaction. Unfortunately, the interpretation of the results of these models is not as straight forward as in the linear case. In this paper, we present a method for drawing inferences for interaction models by defining the partial influence function. We present an example that demonstrates how one may draw new inferences by constructing the confidence intervals for the partial influence functions based on the traditional published findings for regressions with interaction terms.

The Interpretation of Multiple Dummy Variable Coefficients: An Application to Industry Effects in Wage Equations

The traditional textbook approach to avoiding the dummy trap problem is to delete a category from each qualitative variable. This paper illustrates an alternative constraint which can be used to transform conventional dummy variable coefficients. This constraint serves to simplify their interpretation when the regression equation contains several qualitative variables and allows the computation of a coefficient for the deleted class. Using this constraint the intercept term can be written as the mean Y macron and the coefficients for the dummy variables are now interpreted as differences from the mean of the dependent variable rather than the deleted class. Computation of a standard error for the estimated coefficient of the deleted class is also discussed. An application to examine the importance of industry wage affiliation in explaining relative wages is presented.