Showing papers on "Panel data published in 1996"

Is "learning-by-exporting" important? Micro-dynamic evidence from Colombia, Mexico and Morocco

Abstract: Is there any empirical evidence that firms become more efficient after becoming exporters? Do firms that become exporters generate positive spillovers for domestically-oriented producers? In this paper we analyze the causal links between exporting and productivity using firm-level panel data from three semi-industrialized countries Representing export market" participation and production costs as jointly dependent autoregressive processes, we look for evidence that firms' stochastic cost processes shift when they break into foreign markets We find that relatively efficient firms become exporters, but firms' unit costs are not affected by previous export market participation So the well-known efficiency gap between exporters and non-exporters is due to self-selection of the more efficient firms into the export market, rather than learning by exporting Further, we find some evidence that exporters reduce the costs of breaking into foreign markets for domestically oriented producers, but they do not appear to help these producers become more efficient

The effect of unions on the structure of wages: a longitudinal analysis

Abstract: This paper studies the effects of unions on the structure of wages, using an estimation technique that explicitly accounts for misclassification errors in reported union status, and potential correlations between union status and unobserved productivity. The econometric model is estimated separately for five skill groups using a large panel data set formed from the U.S. Current Population Survey. The results suggest that unions raise wages more for workers with lower levels of observed skills. In addition, the patterns of selection bias differ by skill group. Among workers with lower levels of observed skill, unionized workers are positively selected, whereas union workers are negatively selected from among those with higher levels of observed skill. DESPITE A LARGE AND SOPHISTICATED LITERATURE there is still substantial disagreement over the extent to which differences in the structure of wages between union and nonunion workers represent an effect of trade unions, rather than a consequence of the nonrandom selection of unionized workers. Over the past decade several alternative approaches have been developed to control for unobserved heterogeneity between union and nonunion workers.2 One method that has been successfully applied in other areas of applied microeconometrics is the use of longitudinal data to measure the wage gains or losses of workers who change union status. Unfortunately, longitudinal estimators are highly sensitive to measurement error: even a small fraction of misclassified union status changes can lead to significant biases if the true rate of mobility between union and nonunion jobs is low. This sensitivity led Lewis (1986) to essentially dismiss the longitudinal evidence in his landmark survey of union wage effects. In this paper I present some new evidence on the union wage effect, based on a longitudinal estimator that explicitly accounts for misclassification errors in reported union status. The estimator uses external information on union status misclassification rates, along with the reduced-form coefficients from a multi- variate regression of wages on the observed sequence of union status indicators, to isolate the causal effect of unions from any selection biases introduced by a correlation between union status and the permanent component of unobserved wage heterogeneity. Recognizing that unions may raise wages more or less for

The Effect of Public Capital in State-Level Production Functions Reconsidered

Abstract: Using a panel data set for the forty-eight contiguous states from 1970 to 1983, several estimates are provided of a Cobb-Douglas production function with three types of public capital as inputs. Various specification tests are systematically applied to test for both random and fixed state effects, nonstationarity, endogeneity of the private inputs, and measurement error. In the preferred specification, which is first differences with fixed state effects, the public capital variables are not significant, while the fixed state effects and private input variables are significant. Copyright 1996 by MIT Press.

Are real exchange rates nonstationary? evidence from a panel-data test

Abstract: It is well documented that real exchange rates between the United States and many industrialized countries in the post-Bretton Woods period are integrated. This result implies that purchasing power parity (PPP) does not hold even as a long run relationship. This paper demonstrates that the failure to reject the unit-root hypothesis may result from the low power of existing univariate test procedures. I test for unit roots in real exchange rates by employing a more powerful panel-based procedure. Using both CPI and WPI real dollar exchange rate data, I strongly reject the null hypothesis of a unit root. My results provide overwhelming support for the long-run PPP under the current float. Copyright 1996 by Ohio State University Press.

Environmental Regulation and Innovation: A Panel Data Study

Abstract: In a 1991 essay in Scientific American, Michael Porter suggested that environmental regulation may have a positive effect on the performance of domestic firms relative to their foreign competitors, by stimulating domestic innovation. We examine the stylized facts regarding environmental expenditures and innovation in a panel of manufacturing industries. We find that lagged environmental compliance expenditures have significant positive effect on R&D expenditures when we control for unobserved industry-specific effects. We find little evidence, however, that industries' inventive output (as measured by patent applications) is related to compliance costs).

Demographic Structure and the Political Economy of Public Education

Abstract: This papers examines the relationship between demographic structure and the level of government spending on K-12 education. Panel data for the U.S. states over the 1960-1990 period suggests that an increase in the fraction of elderly residents in a jurisdiction is associated with a significant reduction in per child educational spending. This reduction is particularly large when the elderly residents and the school-age population are from different racial groups. Variation in the size of the school-age population does not result in proportionate changes in education spending, so students in states with larger school-age populations receive lower per-student spending than those in states with smaller numbers of potential students. These results provide support for models of generational competition in the allocation of public sector resources. They also suggest that the effect of cohort size on government-mediated transfers must be considered in analyzing how cohort size affects economic well-being.

Demographic Structure and the Political Economy of Public Education

Abstract: This papers examines the relationship between demographic structure and the level of government spending on K-12 education. Panel data for the U.S. states over the 1960-1990 period suggests that an increase in the fraction of elderly residents in a jurisdiction is associated with a significant reduction in per child educational spending. This reduction is particularly large when the elderly residents and the school-age population are from different racial groups. Variation in the size of the school-age population does not result in proportionate changes in education spending, so students in states with larger school-age populations receive lower per-student spending than those in states with smaller numbers of potential students. These results provide support for models of generational competition in the allocation of public sector resources. They also suggest that the effect of cohort size on government-mediated transfers must be considered in analyzing how cohort size affects economic well-being.

The Effects of R&D, Foreign Technology Purchase, and Domestic and International Spillovers on Productivity in Indian Firms

Abstract: Using panel data on Indian firms from 1974-75 to 1981-82, the authors provide estimates of the impact on output of Indian firms' R&D expenditures, their technology purchases, and international and domestic R&D spillovers. The private returns to technology purchases are estimated to be high and statistically significant, while the private returns to firms' own R&D expenditures are somewhat lower and are often insignificant. There is evidence of both international and domestic R&D spillovers. The estimates permit estimation of total factor productivity growth in the period preceding India's industrial liberalization policies. Copyright 1996 by MIT Press.

The Dynamics of Franchise Contracting: Evidence from Panel Data

Abstract: In this paper, we model the determinants of franchise contract terms, namely royalty rates and franchise fees, using a unique panel data set of about 1000 franchisors for the period 1980-1992. We focus on the extent to which firms adjust the terms of their contracts as they become better established, and find that adjustment is relatively infrequent and that firms do not systematically raise or lower their royalty rates or franchise fees when they do adjust them. These results tend to refute a number of existing theories of franchising that are based on risk-sharing, asymmetric information, and certain incentive structures, but support those based on franchisor opportunism and to some extent double-sided moral hazard. Our results also suggest that when industrial organization economists do not have access to panel data, their work may well suffer from the omitted variable bias caused by unobserved firm effects.

Permanent Income, Current Income, and Consumption: Evidence From Two Panel Data Sets

Abstract: In this article, I estimate Euler equations—that is, the first-order conditions of the consumers' maximization problem—using data from two data sets. Consumption data are taken from the Consumer Expenditure Survey. Income data are taken from the Panel Study of Income Dynamics. Because the data for the estimation come from two samples, I use a generalization of the instrumental variables estimator—the two-sample instrumental variables estimator. I find evidence that consumption is excessively sensitive to predictable income growth. The estimates of the coefficient of excess sensitivity for three consumption measures range from .2 to .5.

Using Panel Data to Evaluate Growth Theories

Abstract: A method for using panel data to evaluate growth theories is formulated. This method enables endogenous growth models predicting that countries have different trend growth rates to be tested against exogenous growth models predicting that countries have parallel growth paths. This method is applied to data for two samples of countries.

Government Interventions and Productivity Growth

Abstract: This article investigates the impact of government industrial policy and trade protection of the manufacturing sector in Korea Empirical results are provided, using four-period panel data for the years 1963 through 1983, for thirty-eight Korean industries in which trade protection reduced growth rates of labor productivity and total factor productivity, while industrial policies, such as tax incentives and subsidized credit, were not correlated with total factor productivity growth in the promoted sectors The evidence thus implies that less government intervention in trade is linked to higher productivity growth

"The Minimum Wage and the Employment of Youth: Evidence from the NLSY"

Abstract: Using panel data on individuals from the National Longitudinal Survey of Youth, we find that employed individuals who were affected by the increases in the federal minimum wage in 1979 and 1980 were about 3 percent less likely to be employed a year later, even after accounting for the fact that workers employed at the minimum wage may differ from their peers in unobserved ways.

Augmenting travel cost models with contingent behavior data

Abstract: This paper proposes contingent behavior survey questions as a valuable supplement to observed data in travel cost models of non-market demand for recreational resources. A set of observed and contingent behavior results for each survey respondent allows the researcher to control for individual heterogeneity by taking advantage of panel data methods when exploring the nature of respondent demands. The contingent scenarios also provide opportunities to (a) test for differences between observed and contingent preferences and/or (b) assess likely demands under conditionsbeyond the domain of observed variation in costs or resource attributes. Most importantly, contingent scenarios allow the researcher to imposeexogenously varying travel costs. Exogenous imposition of travel costs together with panel methods reduces the omitted variables bias that plagues observed-data travel cost models of recreational demand. Using a convenience sample of data for illustrative purposes, we show how to estimate the demand for recreational angling by combining observed and contingent behavior data. We begin with simple naive pooled Poisson models and progress to more theoretically appropriate fixed effects panel Poisson specifications.

Modeling Farm-Level Crop Insurance Demand with Panel Data

Abstract: A random‐effects, binomial probit model is applied to data for a panel of Kansas wheat farms to examine Multiple Peril Crop Insurance demand. A theoretical model is developed which suggests inclusion of the moments of both market return and the return to insurance. Empirical results indicate that the first and second moments of both market return and the returns to insurance are significant. The price elasticity of demand is estimated to be −0.65. Preseason weather variables when included in the models were not found to be significant, failing to support the hypothesis of intertemporal adverse selection.

Why Do Firms Adopt Profit‐Sharing and Employee Ownership Plans?

Abstract: Profit-sharing and employee ownership in companies have attracted considerable interest, yet there has been little research on factors predicting the adoption and maintenance of these plans. This study uses new data from a survey of 500 US public companies, and panel data on corporate financial variables, to examine factors predicting the presence and adoption of profit- sharing and employee stock ownership plans (ESOPs) in the 1975–91 period. Several findings support productivity-related motivations for such plans (including higher R&D levels among old profit-sharing firms, and recent adoption of job enrichment programmes among new profit-sharing firms), while others support flexibility-related motivations (including higher variance in profits prior to the adoption of profit-sharing plans and ESOPs). Unionized firms were less likely to have either type of plan in 1975, but equally likely to adopt them subsequently (often in concessionary contracts). Comparisons of cross-sectional and panel results illustrate advantages of panel data in disentangling the causes and effects of profit-sharing and ESOPs.

The Intertemporal Elasticity of Substitution: An Exploration using a US Panel of State Data

Abstract: This paper uses state-level consumption data to estimate the intertemporal elasticity of substitution of consumption (IES). In contrast to the results of Hall (1988) and Campbell and Mankiw (1989), we provide evidence indicating that the IES is significantly different from zero and probably close to one. Since inference about the IES in the context of the standard Euler equation is problematic as a result of mis-specification bias, we cast most of our discussion in the context of the framework developed by Campbell and Mankiw. This modifies the Euler equation in that a fraction of agents simply consume their income. The use of panel data to examine the relationship between interest rates and consumption growth has two advantages. First, we achieve a significant increase in precision, which in particular allows us to rule out a zero IES. Second, we can use the panel aspect of the data to bypass asset return measurement problems. In particular, we identify a common time component in expected consumption growth that is associated with movements in interest rates when the IES is positive.

Efficiency analysis with panel data: A study of Portuguese dairy farms

Abstract: The technical efficiency of Portugese dairy farms is measured using frontier production functions estimated from panel data. Alternative estimators are compared and evaluated. The results suggest an average efficiency of 60 to 70 percent. The relationship between efficiency and farm characteristics is explored. Efficiency appears to be positively correlated with farm size but independent of degree of specialisation. The implications of the results for alternative development strategies are considered. Copyright 1996 by Oxford University Press.

The Determinants of the Choice between Fixed and Flexible Exchange-Rate Regimes

Abstract: In recent years, analysts and policy makers alike have been evaluating the nexus between exchange rates and macroeconomic stability. Among the most important questions is why have some countries adopted rigid, including fixed, exchange-rate paper addresses this question from a political economy perspective both theoretically and empirically. The model assumes that the monetary authority minimizes a quadratic loss function that captures the trade-off between infla- tion and unemployment. This framework is initially applied to the case where monetary authorities must choose between a (permanently) fixed and a flexible exchange-rate regime. In choosing the regime it is assumed authorities compare the expected losses under each scenario. The model is subsequently extended extended to cover the somewhat more complicated case where the authoriities must choose between fixed-but-adjustable and flexible exchange-rate regimes. In this latter case, potential political costs of abandoningithe pegged rate are taken into account. In the empirical section, an unbalanced panel data set of 63 countries from 1980-1992 is used to estimate a series of probit models, with a binary exchange-rate regime index as the dependent variable. Among the most important explanatory variables were measures of countries' historical degree of political instability, measures of the probability of abandoning pegged rates, and variables related to the relative importance of real (unemployment) targets in the preferences of monetary authorities. The regression results support the political economy approach developed in the theoretical discussion.

What Determines the Current Account? A Cross-Sectional and Panel Approach

Abstract: This paper uses cross-section and panel data to examine the determinants of the current account. The empirics find a significant impact of the stage of development and demographic factors in the cross section. Estimating partial-adjustment and error-correction models using panel data, the paper finds a short- and long-run impact of fiscal policy on the current account in the time series. The real exchange rate, the business cycle and the terms of trade are also shown to have short-run effects on the current account, while the stage of development and demographics have longer-run effects.

Incentives and Careers in Organizations

Abstract: This paper surveys two related pieces of the labor-economics literature: incentive pay and careers in organizations. In the discussion of incentives, I first summarize theory and evidence related to the classic agency model, which emphasizes the tradeoff between insurance and incentives. I then offer econometric and case-study evidence suggesting that this classic model ignores several crucial issues and sketch new models that begin to analyze these issues. In the discussion of careers in organizations, I begin by summarizing evidence on wages and positions using panel data within firms. This evidence is sparse and far-flung (drawn from industrial relations, organizational behavior, and sociology, as well as from labor economics); I identify ten basic questions that merit more systematic investigation. Turning to theory, I describe building-block models that address one or a few pieces of evidence, but focus on more recent models that address broad patterns of evidence.

Real Exchange Rate Levels, Productivity and Demand Shocks: Evidence from a Panel of 14 Countries

Abstract: We investigate the long-run relationship between the real exchange rate, traded and non-traded productivity levels, and government spending for 14 OECD countries, using recently developed panel cointegration tests. The results indicate that under certain assumptions it is easier to detect cointegration in panel data than in the available time series; moreover, the rate of reversion to long-run equilibrium is estimated with greater precision.

Technical efficiency measures for dairy farms using panel data: A comparison of alternative model specifications

Abstract: This article examines the impact of fixed effects production functions vis-a-vis stochastic production frontiers on technical efficiency measures. An unbalanced panel consisting of 96 Vermont dairy farmers for the 1971–1984 period was used in the analysis. The models examined incorporated both time-variant and time-invariant technical efficiency. The major source of variation in efficiency levels across models stemmed from the assumption made concerning the distribution of the one-sided term in the stochastic frontiers. In general, the fixed effects technique was found superior to the stochastic production frontier methodology. Despite the fact that the results of various statistical tests revealed the superiority of some specifications over others, the overall conclusion of the study is that the efficiency analysis was fairly consistent throughout all the models considered.