Kamhon Kan

Household demand for fats and oils: two-step estimation of a censored demand system

A censored system of household fat and oil demand equations is estimated with a two-step procedure, using cross-sectional data from the 1987–1988 US Nationwide Food Consumption Survey. Own price and total expenditure elasticities are close to unity and there is no evidence of gross substitutability. Compensated elasticities suggest net substitution among the products considered.

THE DESIGN OF PAYMENT SYSTEMS FOR PHYSICIANS UNDER GLOBAL BUDGET: AN EXPERIMENTAL STUDY

Abstract This paper analyzes two alternative methods for controlling the cost of physician services under global budgeting: the expenditure target involves quantity control while the expenditure cap is a retrospective price-setting mechanism. Theoretical analysis shows that given the same spending, a larger quantity of physician services will be provided under the symmetric Nash equilibrium outcome of expenditure cap. We conducted laboratory-controlled experiment and found that the behavior of medical students was well-approximated by the symmetric Nash equilibrium. Therefore, the experimental results support the theoretical analysis and confirm that expenditure cap is a better system.

The Effects of Employment Protection on Labor Turnover: Empirical Evidence from Taiwan

This paper investigates the effects of employment protection legislation on the rates of hiring, separation, worker flows, job reallocation, and churning flows for the case of Taiwan. Our empirical identification takes advantage of a reform created by Taiwans enactment of Labor Standards Law, which has substantially increased the costs of firing, and the implementation of the laws enforcement measures. Moreover, our identification also exploits the fact that the stringency of the laws provisions and the intensity of the laws enforcement vary with establishment size. On the basis of the monthly data at the establishment level for the period 1983-1995, we find that Taiwans Labor Standards Law and its enforcement measures have dampened labor turnover for medium-sized and large establishments, while that of small establishments was not affected.

A limited information estimator for the multivariate ordinal probit model

A limited information estimator for the multivariate ordinal probit model is developed. The main advantage of the estimator is that even for high dimensional models, the estimation procedure requires the evaluation of bivariate normal integrals only. The proposed estimator also avoids the potential problem of encountering local maxima in the estimation process, which is looming using maximum likelihood. The performance of the limited information estimator is shown by Monte Carlo experiments to be excellent and it is comparable to that of the maximum likelihood estimator. Finally, an application of the limited information multivariate ordinal probit to model the consumption level of cigarette, alcohol and betel nut is presented.

The impact of global budgeting on treatment intensity and outcomes

This paper investigates the effects of global budgets on the amount of resources devoted to cardio-cerebrovascular disease patients by hospitals of different ownership types and these patients’ outcomes. Theoretical models predict that hospitals have financial incentives to increase the quantity of treatments applied to patients. This is especially true for for-profit hospitals. If that’s the case, it is important to examine whether the increase in treatment quantity is translated into better treatment outcomes. Our analyses take advantage of the National Health Insurance of Taiwan’s implementation of global budgets for hospitals in 2002. Our data come from the National Health Insurance’s claim records, covering the universe of hospitalized patients suffering acute myocardial infarction, ischemic heart disease, hemorrhagic stroke, and ischemic stroke. Regression analyses are carried out separately for government, private not-for-profit and for-profit hospitals. We find that for-profit hospitals and private not-for-profit hospitals did increase their treatment intensity for cardio-cerebrovascular disease patients after the 2002 implementation of global budgets. However, this was not accompanied by an improvement in these patients’ mortality rates. This reveals a waste of medical resources and implies that aggregate expenditure caps should be supplemented by other designs to prevent resources misallocation.

Intergenerational Income Mobility in Taiwan: Evidence from TS2SLS and Structural Quantile Regression

Abstract We estimate intergenerational income mobility in Taiwan, employing repeated cross-sectional data. We find that the father–son, father–daughter, mother–son and mother–daughter income elasticities-at-40 are around 0.18, 0.23, 0.50 and 0.54, respectively. Moreover, the mother–child income elasticity increases slightly over children’s birth year, while the father–child elasticity is stable, but we do not find any time trend in elasticities. Since mean-regression results may not be informative in fast growing economies, we estimate relative mobility via structural quantile regression models. The results indicate that parents’ income affects children’s income mainly through the propagation of children’s income shocks, rather than affecting the level directly.

Simulation-Based Two-Step Estimation with Endogenous Regressors

This paper considers models with latent/discrete endogenous regressors and presents a simulation-based two-step (STS) estimator. The endogeneity is corrected by adopting a simulation-based control function approacy. The first step consists of simulating the residuals of the reduced-form equation for endogenous regressors. The second step is a regression model (linear, latent or discrete) with the simulated residual as an additional regressor. In this paper we develop the asymptotic theory for the STS estimator and its rate of convergence.

Strategic Motives Drive Proposers to Offer Fairly in Ultimatum Games: An fMRI Study

The hypothesis of strategic motives postulates that offering fairly in the Ultimatum Game (UG) is to avoid rejection and receive money. In this fMRI study, we used a modified UG to elucidate how proposers reached decisions of offering fairly and to what extent they considered offering selfishly with different stakes. We had proposers choose between a fair and a selfish offer with different degrees of selfishness and stake sizes. Proposers were less likely and spent more time choosing the fair offer over a slightly-selfish offer than a very selfish offer independent of stakes. Such choices evoked greater activation in the dorsal anterior cingulate cortices that typically involve in allocation of cognitive control for cost/benefit decision making. Choosing a fair offer in higher stakes evoked greater activation in the anterior cingulate gyrus (ACCg) and the areas that previously have been implicated in reward and theory of mind. Furthermore, choosing a slightly selfish offer over a fair offer evoked greater activation in the anterior cingulate sulcus, ACCg, ventral tegmental area (or substantia nigra) and anterior insular cortex signalling the higher gain and implying higher rejection risk. In conclusion, our findings favoured the hypothesis that proposers offer fairly based on the strategic motives.

Interlinked Contracts: An Empirical Study

This study investigates contractual relations between farmers and sugar mills in Japanese colonial Taiwan. Our investigation is based on a model of interlinked contracts that is adapted from Gangopadhyay and Sengupta (1998). The validity of our models predictions is verified by analysing a dataset consisting of contracts between Taiwans cane farmers and sugar mills. Our data suggest that the contractual relationship is consistent with a scenario in which the interest rates charged by sugar mills on cash loans to farmers are set in order to prevent the diversion of funds to other uses.

Segmented trend modelling of the US GNP series

Structural changes in economic time series are modelled as piecewise linear trends. A statistical method is considered to estimate and select the number and location of trend-breakks simultaneously. The method is applied to the GNP series of the US.