Journal of Economic and Social Measurement - Volume 30, issue 4

Authors: Klein, Lawrence R. | Kushnirsky, Fyodor I.

Article Type: Research Article

Abstract: We design a methodology for combining high frequency (e.g., monthly) and low frequency (e.g., annual) econometric systems. Our goal is to demonstrate how a high frequency model can be used for periodic adjustments of selected indicators in a low frequency …model. The methodology includes a theoretical foundation, methods for the adjustment of model structures and properties, procedures for achieving mutually consistent solutions, and step-by-step applications. The computational procedures are based on: (a) employment of a loss function in order to force the solution of the low frequency model to come close to the solution of the high frequency model and (b) obtaining a joint solution by inserting the values of key variables exogenously from the high into the low frequency model. To illustrate the application, we use simplified monthly and annual macroeconometric models for Ukraine. We also demonstrate a convenient computational procedure for solving a model that combines econometric and input-output structures having the same frequency. Show more

DOI: 10.3233/JEM-2005-0258

Citation: Journal of Economic and Social Measurement, vol. 30, no. 4, pp. 251-277, 2005

Authors: Borooah, Vani K. | Iyer, Sriya

Article Type: Research Article

Abstract: This paper suggests a method of decomposing differences in inter-group probabilities from a logit model and shows how it can be related to similar decompositions derived from a Oaxaca-Blinder framework. In so doing, it offers a solution to a problem, …embedded within the Oaxaca-Blinder decomposition, relating to the appropriate choice of common coefficient vectors with which to evaluate the different attribute vectors. The decomposition method also shows how pair-wise comparisons of groups might be conducted in the presence of more than two groups, without discarding the information on groups excluded from the comparison. The proposed method is applied to inter-group differences in schooling participation in India and the results are compared with the Oaxaca-Blinder method. The decomposition is applied specifically to inter-group differences in the enrolment of boys at school in India. Show more

Keywords: Logit regression, school enrolment, India, decomposition methods

DOI: 10.3233/JEM-2005-0256

Citation: Journal of Economic and Social Measurement, vol. 30, no. 4, pp. 279-293, 2005

Authors: Yun, Myeong-Su

Article Type: Research Article

Abstract: Recently the Oaxaca decomposition for wage differentials has been extended to study the differences in the first moment. For example, this type of decomposition can be used to study differences in labor market participation rates by race, where the participation …equation may be estimated by logit or probit. This paper develops a simple test for the significance of characteristics and coefficients effects in a decomposition analysis of differences in the first moment at aggregate and individual variable levels. In order to derive the test statistics, the asymptotic variances of the characteristics and coefficients effects at both aggregate and individual variable levels are calculated using the well-known delta method. The significance test for the Oaxaca decomposition is incorporated as a special case of this proposed test. Show more

Keywords: Decomposition analysis, significance test, characteristics effect, coefficients effect

DOI: 10.3233/JEM-2005-0257

Citation: Journal of Economic and Social Measurement, vol. 30, no. 4, pp. 295-304, 2005

Authors: Fairlie, Robert W.

Article Type: Research Article

Abstract: The Blinder-Oaxaca decomposition technique is widely used to identify and quantify the separate contributions of group differences in measurable characteristics, such as education, experience, marital status, and geographical differences to racial and gender gaps in outcomes. The technique cannot be …used directly, however, if the outcome is binary and the coefficients are from a logit or probit model. I describe a relatively simple method of performing a decomposition that uses estimates from a logit or probit model. Expanding on the original application of the technique in Fairlie [3], I provide a more thorough discussion of how to apply the technique, an analysis of the sensitivity of the decomposition estimates to different parameters, and the calculation of standard errors. I also compare the estimates to Blinder-Oaxaca decomposition estimates and discuss an example of when the Blinder-Oaxaca technique may be problematic. Show more

DOI: 10.3233/JEM-2005-0259

Citation: Journal of Economic and Social Measurement, vol. 30, no. 4, pp. 305-316, 2005

Authors: Phillips, Keith R.

Article Type: Research Article

Abstract: The timing, length and severity of economic recessions and expansions in a state are important to businesses seeking to set up operations or expand in those areas. Given a limited amount of data at the state level and their sometimes …inconsistent movements, it is not straightforward to define a state business cycle. In this article I attempt to measure the Texas business cycle using a technique developed by Stock and Watson that statistically estimates the underlying comovement in broad indicators of the state's economy. The new Texas Coincident Index (TCI) is constructed with the Texas unemployment rate, a quarterly Real Gross State Product measure due to Berger and Phillips, and a nonfarm employment series that is benchmarked quarterly and is seasonally adjusted using the two-step approach described in Berger and Phillips. Use of these components and the Kalman filter, which smoothes across variables as well as over time, results in an index which is much smoother and gives clearer signals of turning points than the old TCI produced by Phillips. The new TCI exhibits cyclical patterns that are highly correlated with those of employment and RGSP, and matches well with recessions and expansions that were independently identified. Show more

DOI: 10.3233/JEM-2005-0255

Citation: Journal of Economic and Social Measurement, vol. 30, no. 4, pp. 317-333, 2005

Authors: Durand, René

Article Type: Research Article

Abstract: This note extends the notion of produced inputs to human capital services and shows that the measure of the productivity residual is nil when inputs are produced. The standard growth accounting literature often confuses the services of produced human capital …services with the hours of work of skilled workers, explaining why attempts to mine out the productivity residual have failed. The note also criticizes the improper specification of technical progress in the production function when using produced inputs and suggests a reinterpretation of some often uses notions or expressions. Show more

Keywords: Produced and non-produced inputs, productivity, growth accounting, embodiment

DOI: 10.3233/JEM-2005-0241

Citation: Journal of Economic and Social Measurement, vol. 30, no. 4, pp. 335-344, 2005