Advanced Search
MyIDEAS: Login to save this paper or follow this series

Relaxing the IIA Assumption in Locational Choice Models: A Comparison Between Conditional Logit, Mixed Logit, and Multinomial Probit Models

Contents:

Author Info

  • Dahlberg, Matz

    ()
    (Department of Economics)

  • Eklöf, Matias

    ()
    (Department of Economics)

Abstract

This paper estimates a locational choice model to assess the demand for local public services, using a data set where individuals chooses between 26 municipalities within a local labor market. We assess the importance of the IIA assumption by comparing the predictions of three difference models; the conditional logit (CL) model, the mixed logit (MXL) model, and the multinomial probit (MNP) model. Our main finding is that a MXL or a MNP estimator leads to exactly the same conclusions as the traditional CL estimator. That is, given the data used here, the IIA assumption, and hence the use of a CL estimator, seems to be valid when estimating Tiebout-related migration. The only instance when we get somewhat different results when using the MXL or MNP estimator compared with the CL estimator is when we have a too parsimonious model. One possible hypothesis explaining this result is that omitted variables are captured by the distribution parameters of the coeffcients of the included variables, leading to the false conclusion that the coefficients are not fixed. This hypothesis is supported by the results from a Monte Carlo investigation.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.nek.uu.se/pdf/wp2003_9.pdf
Our checks indicate that this address may not be valid because: 404 Not Found. If this is indeed the case, please notify (Katarina Grönvall)
Download Restriction: no

Bibliographic Info

Paper provided by Uppsala University, Department of Economics in its series Working Paper Series with number 2003:9.

as in new window
Length: 24 pages
Date of creation: 09 Feb 2003
Date of revision:
Handle: RePEc:hhs:uunewp:2003_009

Contact details of provider:
Postal: Department of Economics, Uppsala University, P. O. Box 513, SE-751 20 Uppsala, Sweden
Phone: + 46 18 471 25 00
Fax: + 46 18 471 14 78
Email:
Web page: http://www.nek.uu.se/
More information through EDIRC

Related research

Keywords: Locational choice; Tiebout migration; Mixed logit; Multinomial probit;

Find related papers by JEL classification:

This paper has been announced in the following NEP Reports:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Hajivassiliou, Vassilis & McFadden, Daniel & Ruud, Paul, 1996. "Simulation of multivariate normal rectangle probabilities and their derivatives theoretical and computational results," Journal of Econometrics, Elsevier, vol. 72(1-2), pages 85-134.
  2. Borsch-Supan, Axel & Hajivassiliou, Vassilis A., 1993. "Smooth unbiased multivariate probability simulators for maximum likelihood estimation of limited dependent variable models," Journal of Econometrics, Elsevier, vol. 58(3), pages 347-368, August.
  3. Nechyba, Thomas J. & Strauss, Robert P., 1998. "Community choice and local public services: A discrete choice approach," Regional Science and Urban Economics, Elsevier, vol. 28(1), pages 51-73, January.
  4. Rosen, Harvey S & Fullerton, David J, 1977. "A Note on Local Tax Rates, Public Benefit Levels, and Property Values," Journal of Political Economy, University of Chicago Press, vol. 85(2), pages 433-40, April.
  5. Quigley, John M., 1985. "Consumer choice of dwelling, neighborhood and public services," Regional Science and Urban Economics, Elsevier, vol. 15(1), pages 41-63, February.
  6. Edin, P.-A. & Fredriksson, P., 2000. "LINDA - Longitudinal INdividual DAta for Sweden," Papers 2000-19, Uppsala - Working Paper Series.
  7. Dahlberg, M. & Fredriksson, P., 2001. "Migration and Local Public Services," Papers 2001-12, Uppsala - Working Paper Series.
  8. Brownstone, David & Train, Kenneth, 1998. "Forecasting new product penetration with flexible substitution patterns," Journal of Econometrics, Elsevier, vol. 89(1-2), pages 109-129, November.
  9. Daniel McFadden & Kenneth Train, 2000. "Mixed MNL models for discrete response," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 15(5), pages 447-470.
  10. Bergstrom, Theodore C & Rubinfeld, Daniel L & Shapiro, Perry, 1982. "Micro-Based Estimates of Demand Functions for Local School Expenditures," Econometrica, Econometric Society, vol. 50(5), pages 1183-1205, September.
  11. Bergstrom, Theodore C & Goodman, Robert P, 1973. "Private Demands for Public Goods," American Economic Review, American Economic Association, vol. 63(3), pages 280-96, June.
  12. Daniel McFadden, 1977. "Modelling the Choice of Residential Location," Cowles Foundation Discussion Papers 477, Cowles Foundation for Research in Economics, Yale University.
  13. David Revelt & Kenneth Train, 1998. "Mixed Logit With Repeated Choices: Households' Choices Of Appliance Efficiency Level," The Review of Economics and Statistics, MIT Press, vol. 80(4), pages 647-657, November.
  14. Yinger, John, 1982. "Capitalization and the Theory of Local Public Finance," Journal of Political Economy, University of Chicago Press, vol. 90(5), pages 917-43, October.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Aronsson, Thomas & Blomquist, Sören, 2004. "Redistribution and Provision of Public Goods in an Economic Federation," UmeÃ¥ Economic Studies 636, Umeå University, Department of Economics.
  2. Sören Blomquist & Vidar Christiansen, 2008. "Taxation and Heterogeneous Preferences," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 64(2), pages 218-244, June.
  3. Lutz Schneider & Alexander Kubis, 2009. "Are there Gender-specific Preferences for Location Factors? A Grouped Conditional Logit-Model of Interregional Migration Flows in Germany," IWH Discussion Papers 5, Halle Institute for Economic Research.
  4. Nowotny, Klaus & Pennerstorfer, Dieter, 2012. "Ethnic Networks and the Location Choice of Migrants in Europe," Working Papers in Economics and Finance 2012-7, University of Salzburg.
  5. Benjamin Wirth, 2013. "Ranking German regions using interregional migration - What does internal migration tells us about regional well-being?," ERSA conference papers ersa13p1254, European Regional Science Association.
  6. Jonathan Jones & Colin Wren, 2011. "On the Relative Importance of Agglomeration Economies in the Location of FDI Across British Regions," SERC Discussion Papers 0089, Spatial Economics Research Centre, LSE.
  7. Elisabetta Marinelli, 2011. "Graduate migration in Italy - Lifestyle or necessity?," ERSA conference papers ersa11p1608, European Regional Science Association.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:hhs:uunewp:2003_009. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Katarina Grönvall).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.