Applied Econometrics

An empirical note on international R&D spillovers

by Giuseppe Vittucci Marzetti

Co-authored with Andrea Fracasso,
forthcoming in Empirical Economics

Whether international R&D spillovers are global and trade-related is still a debated issue. By adopting two... more Whether international R&D spillovers are global and trade-related is still a debated issue. By adopting two specifications that nest models previously estimated in the literature, we test the hypothesis that international R&D spillovers are global and trade-unrelated for a sample of OECD countries over the period 1971-2004. In particular, via a randomization exercise, we reject the null hypothesis of a “global pool of technology” and show that there are partitions of countries associated with relatively strong/weak knowledge spillovers. Then, we estimate a nonlinear specification that includes simultaneously geographical distance and international trade among the determinants of domestic TFP. We find robust evidence that both factors affect how foreign knowledge impacts on the domestic productivity of each recipient country.

Heterogeneity in price setting behavior, spatial disparities and sectoral diversity: Evidence from a panel of Italian firms

by Carlo Migliardo

pubblished in "Economic Modelling" elsevier vol. 29 (4) (2012) pp. 1106-1118

In this paper, we analyze firms' pricing behavior using a full informative micro dataset that accounts for a large... more In this paper, we analyze firms' pricing behavior using a full informative micro dataset that accounts for a large part of Italian firms. In our view, “the black boxes” to examine are the relations between price setting, market structure and spatial disparities. The paper aims to extend the empirical literature in several directions. A first goal of the research is to investigate the link between heterogeneity in price changes and spatial dependence. Besides, we compare the price dynamics among sectors, namely manufacturing vs. service. It is irrefutable that prices stickiness is linked to good market rigidities. Consequently, these issues have extremely important policy implications; for instance, the Monetary Authority considers the macro price indexes in order to determine the right policy to stabilize the economy and to improve social welfare. However, the Central Bank does not distinguish the likely aggregation bias source from the cross sector–region–country heterogeneities.

Overall, the purpose of this paper is to provide an analysis of survey data that allows us to collect important aspects for Economic Policy analysis, which could not be drawn from analysis with “mesoeconomic” or aggregate data. Finally, we provide empirical evidence that price dynamic heterogeneity across geographical areas, as well as disparities across industries, are statistically significant in our microeconometric models. Indeed, the probability that industries in the backward areas change prices is 30% less than in more developed regions (Northeast). In addition, we find that sectoral diversity counts especially across goods and service industries, even if this outcome is not always robust across microeconometric specifications.

Do Mixed Systems Encourage Voter Turnout? A Statistical Analysis

by Patrick Button

2008, Honours Paper, Department of Economics, University of Regina

Do Voters Affect or Elect Policies? Evidence from the U.S. House: A Replication Incorporating Recent Regression Discontinuity Design Methodology

by Patrick Button

2011, Unpublished Manuscript, Department of Economics, University of California, Irvine

This paper replicates Lee, Moretti, and Butler (2004) using new advances in the regression discontinuity design... more This paper replicates Lee, Moretti, and Butler (2004) using new advances in the regression discontinuity design literature. Specifically, this paper applies local linear regression techniques to estimate discontinuities based on optimal bandwidths described by Imbens and Kalyanaraman (2009). In addition, this paper modernizes the authors’ polynomial modeling techniques based on advice in Lee and Lemieux (2010). As an extension to the robustness checks run by the authors, this paper applies McCrary (2008)’s density test to investigate sorting around the treatment cutoff and investigates the sensitivity of estimates to the addition of covariates, polynomial order, and bandwidth selection. The conclusions of Lee, Moretti, and Butler (2004) still hold up under this more rigorous scrutiny. They conclude that politicians do not moderate their policies in response to leftward or rightward shifts in the median voter. Thus, voters “elect” policies by selecting a politician, rather than being able to “affect” policies through the election process.

The effects of Facebook use on civic participation attitudes and behaviour: A social network study (DPhil research proposal)

by Mark Dix

Unpublished DPhil research proposal

This research proposal suggests a network analysis approach to study the effects of web communication on civic... more This research proposal suggests a network analysis approach to study the effects of web communication on civic participation.

A three-phase mixed methods research design is proposed to examine the effect of supplementary communication via the social networking site Facebook, on the structure (quantity) and content (quality) of social ties within a network of citizens engaged in health and social care policymaking.

Subsequently, it is proposed that the network variables of tie structure and content are tested in an affective capacity against the participatory attitudes and behaviour of networked individuals.

By reframing the study of web use and civic participation under a network theoretical framework, when executed, the proposed study will add to the existing literature in the field through recognition of the mediative capacity of relational ties in the formation of participatory capital.

It is suggested that it is through their effect on relational tie structure and content within citizen participation networks, that social networking sites such as Facebook affect participatory attitudes and behaviour.

To set a critical context for the proposed study, a final qualitative phase of research is suggested to examine the professional power structures impacting upon participatory agency.

Social dimensions of procurement auctions for environmental service contracts: Evaluating tradeoffs between cost-effectiveness and participation by the poor in rural Tanzania

by Rohit Jindal

Published in Land Use Policy.
Co-authored with John Kerr, Paul Ferraro, and Brent Swallow.

Determining the level of payment and selecting participants are important but frequently neglected issues that affect... more Determining the level of payment and selecting participants are important but frequently neglected issues that affect social, economic and environmental performance of payment for environmental services (PES) programs. We use a pilot auction to address these issues in the context of a PES program in Tanzania's Uluguru Mountains. Two-hundred fifty-one local farmers submitted sealed bids in the auction. The results reveal the supply of PES contracts at different prices. Simulations using the auction results and household data show large tradeoffs between achieving cost effectiveness and maximizing participation by poor households. A monitoring survey 21 months after the auction found that most auction winners’ trees had survived, with performance uncorrelated to the farmer's poverty status or bid level. Although aspects of our auction design limit the strength of some of the conclusions we draw from the data, our study shows how pilot auctions can assist decision makers in estimating payment levels for PES contracts. Auction participants stated that the auction provided transparency in contract allocation and that winners felt peer pressure to comply with contracts, which suggest areas for future research regarding the potential advantages of using auctions to allocate PES contracts in developing countries.

Reducing poverty through carbon forestry? Exploring impacts of the N’hambita Community Carbon Project in Mozambique.

by Rohit Jindal

Accepted in World Development
Co-authored with John Kerr and Sarah Carter

Debates about the potential poverty alleviation impacts of global carbon markets are far from settled. We extend this... more Debates about the potential poverty alleviation impacts of global carbon markets are far from settled. We extend this debate by examining the impacts of a project in Mozambique that pays local people for carbon forestry activities. We conduct before-and-after project comparison using household data from project and non-project villages. Even though the poorest households participate widely in the project, the impact on incomes is small despite generous carbon accounting and contract terms. Leakage and impermanence remain strong concerns. Development activities under the project unrelated to carbon sequestration have a much bigger impact, albeit on a smaller number of households.

Wage effects of recruitment methods: The case of the italian social service sector

by Francesco Pastore

Co-authored with Michele Mosca
In S. Destefanis and M. Musella, Paid and Unpaid Labour in Social Utility Services, Physica Verlag, Heidelberg (also available as IZA dp, n. 3422).

This paper uses a unique data set containing detailed micro-information on organisations, managers, workers and... more This paper uses a unique data set containing detailed micro-information on organisations, managers, workers and volunteers belonging to public, private forprofit and private nonprofit institutions delivering social services in Italy. The analysis aims to estimate the determinants of wages across organisations at a sector level focusing on the role of hiring and job search methods, including informal networks. We find that, independent of the organisation type, being hired through public competitions brings with it a substantial wage premium (ranging from 7 to 32%). Informal networks bring with them a wage penalty (-6.5%) in the state sector, where formal hiring methods are common, and a wage premium (6.3%) in social cooperatives and religious institutions, where formal hiring methods are not common. Interestingly, the differences in hiring and in job search methods between state and private organisations explain from 50% to 100% of the conditional wage differentials across organisation types. Our interpretation of these findings is that nonprofit organisations prefer informal recruitment methods not for nepotistic reasons, but to better select the most motivated workers, those who share the nonprofit mission. This paper adds to the previous literature by suggesting that in addition to lower than average monetary compensations, informal recruitment methods are part of the process of self-selection of motivated workers in nonprofit organisations.

The Impact of Tourism on Income Inequality: An Econometric Assessment

by Suraj Pant

published in UCLA Undergraduate Journal of Economics, Winter 2011.

Current data show that tourism is one of the fastest growing sectors in the world economy. The economic literature... more Current data show that tourism is one of the fastest growing sectors in the world economy. The economic literature explains that in line with an outward-oriented growth strategy, tourism was promoted as a means of development during the 1970’s by many international agencies. Empirical investigations on the impact of tourism show that the greater focus on tourism has been beneficial, as tourism has had a significant positive impact on growth. However, the distributional consequences of the growth through tourism have not been investigated. This paper presents original research on tourism’s impact on income inequality using cross-country and panel data regressions. Results from the regression analyses show that the tourism sector has decreased gross income inequality in the sample of countries used in this study. The results also demonstrate that domestic tourism contributes more to decreasing income inequality than international tourism does and weakly support the hypothesis that the tourism sector decreases income inequality more than other sectors linked to tourism.

The effects of fiscal decentralization on household income inequality: Some empirical evidence

by Simone Salotti

Co-authored with Agnese Sacchi (Universita' di Roma Tre)

This paper originated from "Income inequality, regional disparities, and fiscal decentralization in industrialized countries"

The equity reasons for fiscal (de)centralization

by Simone Salotti

Co-authored with Agnese Sacchi (Universita' di Roma Tre)

This paper originated from "Income inequality, regional disparities, and fiscal decentralization in industrialized countries"

Even worse than you thought: The impact of government debt on aggregate investment and productivity

by Simone Salotti

Co-authored with Carmine Trecroci (Universita' di Brescia)

Productivity and Per Capita GDP Growth: the Role of the Forgotten Factors

by Simone Salotti

Published. Marattin, L., Salotti, S. (2011). Productivity and per capita GDP growth: the role of the forgotten factors. Economic Modelling 28(3), 1219-1225.

Average hourly productivity has often been used to draw conclusions on long run per capita GDP growth, based on the... more Average hourly productivity has often been used to draw conclusions on long run per capita GDP growth, based on the assumption of full utilization of labor resources. In this paper, we argue that a failure to recognize the potential significant wedges among the two variables – even in the long run – can be misleading. By applying both time series and panel cointegration techniques on data on 19 OECD countries, we fail to reject the hypothesis of the absence of a long run common stochastic trend among the two variables in the period 1980–2005. Furthermore, we apply a simple decomposition of GDP growth into five variables, including some related to the supply-side and demographics, so to verify the single contributions to income growth and variance over our period of interest. We conclude that variables that have been so far absent in the growth literature indeed have a non-negligible role in explaining the dynamics of long run per capita GDP growth. In particular, these “forgotten factors” (that we identify with the employment and the activity rates and a demographic ratio) matter more in better performing economies, where we also highlight that productivity has been less important in determining GDP growth than in relatively bad performers.

Assessing the pre-crisis advantages of the EMU for sovereign debt issuers: A panel VAR analysis

by Simone Salotti

Published: Marattin, L., Paesani, P., Salotti, S. (2012). Assessing the pre-crisis advantages of the EMU for sovereign debt issuers: A panel VAR analysis. Rivista di Politica Economica, gennaio/marzo 2012, 7-22.

This is a vastly revised version of "The Euro-dividend: public debt and interest rates in the Monetary Union"

We study the relationship between public debt and real long-term interest rates in the countries currently members of... more We study the relationship between public debt and real long-term interest rates in the countries currently members of the European Monetary Union (EMU) to assess its long-run macroeconomic performance. We employ a panel VAR method using annual data from 1970 to 2008. We find that before the introduction of the euro different levels of public debt affected the responses of the interest rates to debt shocks, with larger effects in high-debt countries relatively to low-debt ones. The inclusion of the EMU years, shows the stabilizing role played by the monetary union in insulating the interest rates from domestic fiscal developments.

Wealth effects in the US: Evidence from the combination of two surveys

by Simone Salotti

Published. Salotti, S. (2012). Wealth effects in the US: Evidence from the combination of two surveys. Economic and Social Review, 43(1), Spring, 67-98.

This is a vastly revised version of "Wealth effect in the US: Evidence from brand new micro-data"

In this article we investigate the role of wealth in household consumption during the period 1989-2007 using a... more In this article we investigate the role of wealth in household consumption during the period 1989-2007 using a household-level cross sectional dataset. We combine information from the Consumer Expenditure Survey and the Survey of Consumer Finances to build a detailed dataset for the US for this. We adopt a sample combination procedure which differs considerably from that used earlier by other researchers. When comparing our results with previous research, we find a higher elasticity of consumption with respect to income and a lower elasticity of consumption with respect to both housing wealth and, particularly, to financial wealth.

Comparative advantages, job destruction and the regional pattern of polish unemployment

by Francesco Pastore

Co-authored with Andrew Newell and Mietek Socha.
Acta Oeconomica, 52(2): 187-204.

This paper investigates the relationship between industrial restructuring and regional unemployment in Poland.... more This paper investigates the relationship between industrial restructuring and regional unemployment in Poland. Poland's regional unemployment broke out of nothing at the beginning of the 1990s decade. Since then, it has remained remarkably unchanged over the decade for a variety of factors, such as the gradual restructuring process, labour supply rigidities and technological differences. The role of each of these factors is assessed within the framework of hazard functions applied to the inflow to unemployment from a job, computed using Polish Labour Force Survey data. When voivodships are groupedaccording to their unemployment rate it can be seen that low unemployment voivodships form a heterogeneous group, including both rural and urban areas. Applying a new method of analysis of the labour market effects of trade integration, the paper reveals circumstantial evidence on how Poland's international comparative advantages in labour-intensive manufacturing combine with the economic advantages of urbanised regions to play a significant role in shaping the regional distribution of Poland's unemployment.

The gender gap in early career in Mongolia

by Francesco Pastore

International Journal of Manpower, 31(2): 188-207 (also available as IZA DP, n. 4480, November).

Purpose of this paper
The paper studies the determinants of gender differences in early career in Mongolia, one... more Purpose of this paper
The paper studies the determinants of gender differences in early career in Mongolia, one of the fifty poorest countries of the world.
Design/methodology/approach
The analysis takes advantage of an ad hoc School to Work Survey (SWTS) on young people aged 15-29 years carried out in 2006. Extended and augmented Mincerian earning equations are run and then the Juhn, Murphy and Pierce (1993) decomposition method is applied to disentangle the quantity effect, the price effect and the residual wage distribution effect.
Findings
On average, female wages are not lower than those of males. However, although not statistically significant among teenagers (15-19), the conditional gender gap becomes significant and sizeable for the 20-29 year olds. The JMP decomposition shows that most of the gap is due to differences in the way the market values the same characteristics of men and women: in fact, quantity effects tend to reduce, whereas price effects tend to increase the gap. If wages were paid equally, women should have 11.7% more for their higher education attainment and overall 22% more, a substantial gap for the low earnings of Mongolians.
Research limitations/implications
Future research should assess the impact of aspirations of young people on their labour market choices.
Practical implications
The analysis shows that gender differences emerge in concomitance with women establishing a household and giving birth, suggesting that the current interventions to help mothers cope with maternity are insufficient. Changing this outcome is important to reach the Millennium Development Goals.
What is original/value of paper
Labour market issues in Mongolia are understudied, not to mention gender differences in early career.

The distribution of wages in Belarus

by Francesco Pastore

Co-authored with Alina Verashchagina.
Revised version published in: Comparative Economic Studies, 2006, 48 (3), 351-376.

This paper uncovers evidence on the distribution of wages in Belarus in the second half of the 1990s. The returns to... more This paper uncovers evidence on the distribution of wages in Belarus in the second half of the 1990s. The returns to education and work experience are high and stable. While the former is a typical finding of transition studies, the latter is not.
This might be due to the pervasive role of the state in fixing wages in the dominant budget sector, rather than to market forces coming into play. Women experience a small, though largely unexplained wage gap coupled with higher than average
returns to education. A wage curve effect is found, which is similar in size to that of other transition countries, but much higher than in market economies.

FDI Potential and Shortfalls in South Mediterranean Countries: Determinants and Diversion Effects

by Francesco Pastore

Co-authored with Anna Maria Ferragina,
in A. M. Ferragina (ed.), Bridging the Gap: The Role of Trade and FDI in the Mediterranean, Rubettino, Naples, pp. 509-536.

This paper examines FDI flows (1994-2004) from the EU to two neighbouring regions: Central and Eastern Europe (CEE)... more This paper examines FDI flows (1994-2004) from the EU to two neighbouring regions: Central and Eastern Europe (CEE) and South Mediterranean area (MED). The analysis provides circumstantial evidence that the intensification of FDI in CEE, following integration within the EU, has had no discernible dampening effect on FDI flows directed to MED countries. . First, a random effect gravity regression of the determinants of bilateral FDI flows to a large sample of 84 developed and developing partners shows that MED countries are not different from the rest of the sample, when environmental, institutional and policy variables are included in the analysis,. Moreover, the actual capital inflow to MED economies is not much far from the flow predicted based on a gravity equation enlarged to include microeconomic factors. This suggests that the low inflow of FDI to the region might correspond to equilibrium condition considering that economic agents have to face many distortions in MED countries. The common trend followed by coefficients obtained interacting yearly with regional dummies representing the two areas considered confirms this.

Structural Change and Labour Reallocation Across Regions: A Review of the Literature

by Francesco Pastore

Co-authored with Floro Ernesto Caroleo.
in F.E. Caroleo and F. Pastore (eds.), The Labour Market Impact of the EU Enlargement. A New Regional Geography of Europe?, Physica Verlag, Heidelberg, pp. 17-48.

The focus of this chapter is on the microeconomic foundations of structural change and its spatially asymmetric impact... more The focus of this chapter is on the microeconomic foundations of structural change and its spatially asymmetric impact on labour markets. EU economies are undergoing dramatic industrial restructuring due to a number of causes, such as the Eastward enlargement and economic integration of Central and Eastern European countries, as well as a more general process of integration of emerging economies into world trade. In turn this is causing technical change, relocation of economic activities and reallocation of capital and labour resources. An overly optimistic view of the ability of the market economy to sustain economic development has long neglected the labour market consequences of structural change, but the availability of new data sets and the specific nature of economic transition in new member states has once again brought this issue to the fore, suggesting that it might also provide an explanation of several typical features of regional imbalances in old member states. The old and new literature suggests theoretical reasoning and empirical evidence to confirm this.