Mitali Das

Nonparametric estimation of sample selection models

Sample selection models provide an important way of accounting for economic decisions that combine discrete and continuous choices and of correcting for nonrandom sampling. Nonparametric estimators for these models are developed in this paper. These can be used for estimating shapes and important economic quantities, as in standard nonparametric regression. Endogeneity of regressors of interest is allowed for. Series estimators for these models are developed, which are useful for imposing additivity restrictions that arise from selection corrections. Convergence rates and asymptotic normality results are derived. An application to returns to schooling among Australian young females is given. Copyright 2003, Wiley-Blackwell.

The inter-generational link in income mobility: evidence from adoptions

Abstract Estimates of the inter-generational link in income mobility are often contaminated by the correlation of genetic ‘ability’ with measures of parental income. We introduce the use of adoption data to sever this correlation, finding that the inter-generational link is attenuated substantially.

Simple estimators for nonparametric panel data models with sample attrition

Abstract This paper considers a multiperiod random effects panel model with attrition of observations over the panel, allowing for flexible regressions, unknown distributions and attrition in one period to be followed by reappearance in a future period. In each time period, the regression in the retained data is additive in the function of interest and a time-varying correction term that depends on the contemporaneous probability of retention in the sample. These retention probabilities themselves depend on a regressor vector that grows with time. In particular, for the t th and ( t + s )th periods, these vectors differ by exactly s terms. The paper gives two-step estimators that correct for attrition bias by including estimates of these retention probabilities, one for each period that experiences attrition. Asymptotic normality for a class of functionals of the model is derived, also including as special cases the linear and partially linear versions of the model.

Is there evidence against the induced demand hypothesis? Explaining the large reduction in cesarean rates

Revised: September 2001 The induced demand model postulates that physicians respond to adverse income shocks by electing to perform more remunerative procedures. Recent work verifies the predictions of this model, finding a strong shift away from natural deliveries to the more highly reimbursed cesarean delivery in response to exogenous reductions in the fertility rate between 1970-1982. In light of this, the 10.1 percent reduction in fertility rates and contemporaneous 13.3 percent decline in cesarean rates between 1989-1996 appears to contradict the induced demand hypothesis. This paper reconciles the observed phenomenon by examining the role of the dramatic growth in managed care activity in this time period. We argue that while the inducement effect of declining fertility was pervasive in this period, its effect on cesarean rates was offset by the dramatic growth in managed care beginning in the late 1980s. Central to our argument is the removal of physician financial incentives in delivery choice under managed care. Using county-level data for a subset of this time period and instrumental variables estimators, we find a strong negative association between managed care growth and cesarean rates that persists despite controls for fertility, birth severity, risk factors, demographics, state fixed effects and hospital characteristics. JEL Classification: I11, I18, L1, I00 * Correspondence: mitali.das@columbia.edu or Asst. Professor Mitali Das, 1027a, IAB, 420 West 118th Street, NY, NY 10027. Tel/Fax 617.496.2319. I gratefully acknowledge comments and feedback for this or previous versions of the paper from David Genesove, David Sappington, Jon Gruber, Jerry Hausman, Jon Skinner, Catherine Wolfram, Whitney Newey, Jon Dworak, Annette Vissing-Jorgensen, and others. I am also grateful to Alshadye Yemane for excellent and dedicated research assistance. Financial support was partially provided by the AAUW. Remaining errors are my responsibility.

A New Index of External Debt Sustainability

Debt sustainability is fundamentally a probabilistic concept: Debt is rarely sustainable with probability one. We propose an index of external debt sustainability that reflects this uncertainty. Namely we construct the index as the probability that, at the current exchange rate, net external debt is equal to or less than the present value of net exports. Constructing this index involves three steps: (1) deriving the distribution of the present value of net exports at the current exchange rate; (2) deriving the distribution of exchange rates associated with the condition that, for each realization, the present discounted value of net exports is at least equal to the value of current net debt; and (3) assessing where the current exchange rate stands in the distribution of exchange rates and thus the probability that debt is sustainable. Having shown how this can be done, we then compute the index for two countries, the United States and Chile. Our main conclusion is the large degree of uncertainty implied by the presence of large gross asset and liability positions, together with uncertainty about rates of return on these assets and liabilities. The size of the distribution of exchange rate adjustments implies that one should be careful in concluding that debt is or is not sustainable at the current exchange rate and that strong measures are potentially needed to reestablish sustainability. Exchange rates that appear overvalued in the baseline may still imply a reasonably high probability that debt is sustainable at the current exchange rate; symmetrically, exchange rates that appear undervalued in the baseline may still come with a reasonably low probability that debt is unsustainable at the current exchange rate.