Author
Gayle, G. - L., Golan, L., Soytaş, Mehmet Ali
Publication Date
2018-11
Publication Place
-
Wiley
Subject
Discrete choice models, Dynastic models, Intergenerational mobility, Nature versus nurture
Type
Periodical
Language
English
Digital
Yes
Manuscript
No
Library
Özyeğin University
Library Asset ID
1759-7323
Record ID
830b8ff7-148e-495c-9c66-bafd95e11226
Library Location
Economics
Date
2018-11
Sample Text
This paper explores the estimation of a class of life‐cycle discrete choice dynastic models. It provides a new representation of the value function for these class of models. It compare a multistage conditional choice probability (CCP) estimator based on the new value function representation with a modified version of the full solution maximum likelihood estimator (MLE) in a Monte Carlo study. The modified CCP estimator performs comparably to the MLE in a finite sample but greatly reduces the computational cost. Using the proposed estimator, we estimate a dynastic model and use the estimated model to conduct counterfactual simulations to investigate the role Nature versus Nurture in intergenerational mobility. We find that Nature accounts for 20 percent of the observed intergenerational immobility at the bottom of income distribution. That means that 80 percent of mobility at the bottom of the income distribution is explained by economic decision and economic/institutional constraints.
DOI
10.3982/QE771
Cilt
9
