Research
Working Papers
Flexible Demand Estimation and Zero Market Shares
Abstract
This paper develops a flexible discrete-choice demand framework for aggregate data sets that extends Berry, Levinsohn, and Pakes (1995) and the Pure Characteristics Demand Model of Berry and Pakes (2007). I provide a simple, computationally tractable, asymptotically normal estimator based on two contributions: a globally-convergent algorithm to recover utilities from observed demand and a Quasi-Bayes approach that minimizes simulation variance. The framework accommodates zero market shares, which are a challenge for alternative approaches. I show that zeros in demand generate an endogenously censored model, which leads to moment inequalities. As an application, I study moving costs US internal migration data.
Counterfactual Analysis for Structural Dynamic Discrete Choice Models
With Myrto Kalouptsidi, Yuichi Kitamura, and Eduardo Souza-Rodrigues
Abstract
Discrete choice data allow researchers to recover differences in utilities, but these differences may not suffice to identify policy-relevant counterfactuals of interest. In fact, in the case of dynamic discrete choice models, only a narrow set of counterfactuals are point-identified. In this paper, we explore how much one can learn about counterfactual outcomes of interest within this framework. We focus on the partial identification of counterfactuals, while allowing for (mild) model restrictions that can gradually shrink the identified set. We derive bounds for low-dimensional objects (such as average welfare) as arguments of optimization programs, along with a uniformly valid inference procedure. Furthermore, we develop new and tractable computational tools and algorithms suitable for dealing with high-dimensional problems like this. Finally, we illustrate in Monte Carlos, as well as an empirical exercise of firms’ export decisions, the informativeness of the identified sets, and we assess the impact of (common) model restrictions on results.
Collective Households and the Limits to Redistribution
With Carlos da Costa
Abstract
This paper explores optimal distributive policies using a Collective approach to household behavior. This approach allows individual preferences for each spouse, which is crucial when examining policies targeted to women, like Mexico’s Prospera or Brazil’s Bolsa Família programs. We assume the spouses’ decisions follow a Nash-bargaining procedure with internal threat points. We show that the taxation principle does not apply, meaning that the optimal tax schedule is dominated by the optimal mechanism. This is because a single tax schedule cannot optimally influence threat points and induce households to choose desired allocations simultaneously. By permitting couples to opt for joint or individual tax filing, we significantly increase the set of implementable allocations. The central role of threat points motivates an extension of the model in which marriage market negotiations partially determine threat points after marriage. This extension endogenizes the distribution of couples and formalizes how general equilibrium considerations and social norms affect bargaining power within a couple. The extended model generalizes previous approaches to the optimal taxation of couples. Finally, we parametrize and calibrate this model to empirically evaluate the relevance of our theoretical findings. The ability to influence threat points has large effects on equilibrium allocations and the evaluation of optimal policies.
In order to carry through any undertaking in family life, there must necessarily be either complete division between the husband and wife, or loving agreement. When the relations of a couple are vacillating and neither one thing nor the other, no sort of enterprise can be undertaken.Tolstoy, Anna Karenina