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The (mis)specification of discrete duration models with unobserved heterogeneity: a Monte Carlo study

Author

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  • Concetta Rondinelli

    () (Bank of Italy)

  • Cheti Nicoletti

    () (Institute for Social and Economic Research (ISER))

Abstract

Empirical researchers usually prefer statistical models that can be easily estimated using standard software packages. One such model is the sequential binary model with or without normal random effects; such models can be adopted to estimate discrete duration models with unobserved heterogeneity. But ease of estimation may come at a cost. In this paper we conduct a Monte Carlo simulation to evaluate the consequences of omitting or misspecifying the unobserved heterogeneity distribution in single-spell discrete duration models.

Suggested Citation

  • Concetta Rondinelli & Cheti Nicoletti, 2009. "The (mis)specification of discrete duration models with unobserved heterogeneity: a Monte Carlo study," Temi di discussione (Economic working papers) 705, Bank of Italy, Economic Research and International Relations Area.
  • Handle: RePEc:bdi:wptemi:td_705_09
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    References listed on IDEAS

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    Cited by:

    1. Dahai Fu & Yanrui Wu, 2013. "Export Survival Pattern and Determinants of Chinese Manufacturing Firms," Economics Discussion / Working Papers 13-18, The University of Western Australia, Department of Economics.
    2. Mircea Trandafir, 2014. "The Effect of Same-Sex Marriage Laws on Different-Sex Marriage: Evidence From the Netherlands," Demography, Springer;Population Association of America (PAA), vol. 51(1), pages 317-340, February.
    3. Rossella Iraci Capuccinello, 2014. "Determinants and timing of dropping out decisions: evidence from the UK FE sector," Working Papers 15742191, Lancaster University Management School, Economics Department.
    4. Hess, Wolfgang & Persson, Maria, 2010. "The Duration of Trade Revisited: Continuous-Time vs. Discrete-Time Hazards," Working Paper Series 829, Research Institute of Industrial Economics.
    5. Aslihan Atabek Demirhan, 2016. "To be exporter or not to be exporter? Entry–exit dynamics of Turkish manufacturing firms," Empirical Economics, Springer, vol. 51(1), pages 181-200, August.
    6. Pişkin, Erhan, 2017. "Türkiye İhracatının Ölüm-Kalım Meselesi
      [The Matter of Survival for Turkish Exports]
      ," MPRA Paper 81459, University Library of Munich, Germany.
    7. Cobb-Clark, Deborah A. & Herault, Nicolas & Scutella, Rosanna & Tseng, Yi-Ping, 2016. "A journey home: What drives how long people are homeless?," Journal of Urban Economics, Elsevier, vol. 91(C), pages 57-72.
    8. Francesca Modena & Concetta Rondinelli, 2011. "Leaving home and housing prices. The experience of Italian youth emancipation," Temi di discussione (Economic working papers) 818, Bank of Italy, Economic Research and International Relations Area.
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    10. Ron Boschma & Riccardo Cappelli & Anet Weterings, 2017. "Labour mobility, skill-relatedness and plant survival over the industry life cycle: Evidence from new Dutch plants," Papers in Evolutionary Economic Geography (PEEG) 1731, Utrecht University, Department of Human Geography and Spatial Planning, Group Economic Geography, revised Dec 2017.
    11. Andreas Groll & Gerhard Tutz, 2017. "Variable selection in discrete survival models including heterogeneity," Lifetime Data Analysis: An International Journal Devoted to Statistical Methods and Applications for Time-to-Event Data, Springer, vol. 23(2), pages 305-338, April.
    12. Bontemps, Christophe & Bouamra-Mechemache, Zohra & Simioni, Michel, 2012. "Quality Labels and Firm Survival in the French Cheese Industry," IDEI Working Papers 741, Institut d'Économie Industrielle (IDEI), Toulouse.
    13. Concetta Rondinelli & Arnstein Aassve & Francesco Billari, 2010. "Women´s wages and childbearing decisions: Evidence from Italy," Demographic Research, Max Planck Institute for Demographic Research, Rostock, Germany, vol. 22(19), pages 549-578, April.
    14. Stirbat, Liviu & Record, Richard & Nghardsaysone, Konesawang, 2015. "The Experience of Survival: Determinants of Export Survival in Lao PDR," World Development, Elsevier, vol. 76(C), pages 82-94.
    15. Lawley, Chad & Yang, Wanhong, 2015. "Spatial interactions in habitat conservation: Evidence from prairie pothole easements," Journal of Environmental Economics and Management, Elsevier, vol. 71(C), pages 71-89.
    16. Cain Polidano & Domenico Tabasso & Yi-Ping Tseng, 2015. "A second chance at education for early school leavers," Education Economics, Taylor & Francis Journals, vol. 23(3), pages 358-375, June.
    17. Hess , Wolfgang & Schwarzkopf , Larissa & Hunger , Matthias & Holle , Rolf, 2013. "Competing-Risks Duration Models with Correlated Random Effects: An Application to Dementia Patients’ Transition Histories," Working Papers 2013:28, Lund University, Department of Economics.
    18. Stirbat, Liviu & Record, Richard & Nghardsaysone, Konesawang, 2013. "Determinants of export survival in the Lao PDR," Policy Research Working Paper Series 6301, The World Bank.
    19. Hess Wolfgang & Tutz Gerhard & Gertheiss Jan, 2016. "A Flexible Link Function for Discrete-Time Duration Models," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 236(4), pages 455-481, August.
    20. Kristine Simson, 2015. "Explaining upper secondary school dropout: new evidence on the role of local labor markets," Empirical Economics, Springer, vol. 48(4), pages 1419-1444, June.
    21. Steven Bradley & Giuseppe Migali, 2017. "The Effects of the 2006 Tuition Fee Reform and the Great Recession on University Student Dropout Behaviour in the UK," Working Papers 149346773, Lancaster University Management School, Economics Department.
    22. Steve Bradley & Giuseppe Migali, 2015. "The Effect of a Tuition Fee Reform on the Risk of Drop Out from University in the UK," Working Papers 86010138, Lancaster University Management School, Economics Department.
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    24. Wolfgang Hess & Maria Persson, 2012. "The duration of trade revisited," Empirical Economics, Springer, vol. 43(3), pages 1083-1107, December.
    25. Damien Rousselière, 2017. "A flexible approach to age dependence in organizational mortality. Comparing the life duration for cooperative and non-cooperative enterprises using a Bayesian Generalized Additive Discrete Time Survi," Working Papers SMART - LERECO 17-08, INRA UMR SMART-LERECO.

    More about this item

    Keywords

    discrete duration models; unobserved heterogeneity; Monte Carlo simulations;

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions; Probabilities

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