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Inferences for Selected Location Quotients with Applications to Health Outcomes

Author

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  • Gemechis D. Djira
  • Frank Schaarschmidt
  • Bichaka Fayissa

Abstract

Location quotient (LQ) is an index frequently used in geography and economics to measure the relative concentration of activities. This quotient is calculated in a variety of ways depending on which group to use as a reference. Here, we focus on simultaneous inference for the ratios of the individual proportions to the overall proportion based on binomial data. Apparently, this is a multiple comparison problem and multiplicity adjusted location quotients have not been addressed up to now. In fact, there is a negative correlation between the comparisons. The quotients can be simultaneously tested against unity and simultaneous confidence intervals can be constructed for the LQs based on existing probability inequalities and by directly using the asymptotic joint distribution of the associated z-statistics. The proposed inferences are appropriate for analysis based on sample surveys. A real data set is used to demonstrate the application of multiplicity adjusted LQs. A simulation study is also carried out to assess the performance of the proposed methods in terms of achieving a nominal coverage probability. It is observed that the coverage of the simple Bonferroni adjusted Fieller intervals for LQs is just as good as the coverage of the method which directly takes the correlations into account.

Suggested Citation

  • Gemechis D. Djira & Frank Schaarschmidt & Bichaka Fayissa, 2008. "Inferences for Selected Location Quotients with Applications to Health Outcomes," Working Papers 200809, Middle Tennessee State University, Department of Economics and Finance.
    • Handle: RePEc:mts:wpaper:200809
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    File URL: http://capone.mtsu.edu/berc/working/LQ9-4-08_WP.pdf
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    References listed on IDEAS

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    1. Philip Mccann & John H. LL. Dewhurst, 1998. "Regional Size, Industrial Location and Input-Output Expenditure Coefficients," Regional Studies, Taylor & Francis Journals, vol. 32(5), pages 435-444.
    2. Charles Cortese & Judith Leftwich, 1975. "A technique for measuring the effect of economic base on opportunity for blacks," Demography, Springer;Population Association of America (PAA), vol. 12(2), pages 325-329, May.
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    Cited by:

    1. Billings, Stephen B. & Johnson, Erik B., 2012. "The location quotient as an estimator of industrial concentration," Regional Science and Urban Economics, Elsevier, vol. 42(4), pages 642-647.

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    More about this item

    Keywords

    Location quotients; Fieller's theorem; Multiple comparison.;
    All these keywords.

    JEL classification:

    • C12 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Hypothesis Testing: General
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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