Endogenous Initial Conditions Research Articles

Poverty and its persistence: a comparison of natives and immigrants in Sweden

This paper analyzes poverty and its persistence in Sweden using a large panel with detailed income information obtained from tax registers. As opposed to many commonly used household panels, the features of the data utilized in this paper allow us to study native-immigrant differences in poverty. We use a hazard rate model based on multiple spells that accounts for unobserved heterogeneity and endogenous initial conditions. The empirical results suggest that there is negative duration dependence in both exit and entry hazard rates. Moreover, the transition rates are significantly affected by immigrant status, educational attainment, labor market conditions, age, and family status.

The initial conditions problem in longitudinal count process: A simulation study

In this paper we report some simulation studies to compare two basic approaches in modelling the random effects for longitudinal count data. The first, the naive approach, treats the endogenous initial conditions as exogenous and the second, correct approach, models the initial conditions as endogenous. The initial conditions problem in longitudinal count data arises when the process has a Markov property. In some applications, such as clinical studies, the baseline is used as a covariate. This also creates an initial condition problem even if the process has no Markov property. In this paper we shall consider both types of initial conditions. To see the effect of the error variance, baseline effect and lagged effect different values for these parameters are considered. We will apply the proposed approach to epileptic data and show that ignoring the initial conditions results in exaggerated treatment effect and misleading interpretation for the baseline effect.

The initial conditions problem in longitudinal binary process: A simulation study

In this paper we report some simulation studies to compare two basic approaches in modelling the random effects for longitudinal binary data. The first, naive approach, treats the endogenous initial conditions as exogenous and the second, correct approach, models the initial conditions as endogenous. The initial conditions problem in binary data, with unobserved heterogeneity, arises when the process has a Markov property. To see the effect of the error variance and Markov effect, different values for these parameters are considered. We will apply the proposed approach to the data on depression. We show that, in the presence of heterogeneity and stat dependence, ignoring the initial conditions results in biased estimates and misleading interpretation.

Poverty Persistence in Sweden

This Paper analyses the persistence of poverty in Sweden using a hazard rate model based on multiple spells. The model also accounts for unobserved heterogeneity and possibly endogenous initial conditions. We estimate the model on a large representative Swedish panel dataset, LINDA, for the years 1991-2001. The data contains precise information on household disposable income obtained from individual tax files. Poverty is defined using information on annual minimum needs standards determined by the Swedish National Board of Health and Welfare. The data indicates that poverty rates are highest for immigrants, especially refugee immigrants, and for households with children. Further, poverty rates declined, both for natives and for immigrants, between 1991 and 2001, partly as a result of improved labour market conditions. The empirical results suggest that there is significant negative duration dependence in both exit and entry hazard rates. Moreover, the transition rates are significantly affected by immigrant status, educational attainment, labour market conditions, age, and family status. Accounting for multiple spells shows that for two-parent families with two children who are represented by a male person, 44% of native households that fall into poverty at any given point in time remain poor in five or more out of the next ten years. For refugee and non-refugee households, the figures are 62% and 50%, respectively.

State Dependence in Unemployment Incidence: Evidence for British Men Revisited

The issues of persistence in the observed labour market status of men are investigated using the British Household Panel Survey for the period 1991-97. The paper extends previous work in many directions. In particular, problems of endogenous initial conditions, and unobserved heterogeneity, are addressed within the context of different definitions of unemployment. In addition, allowance is also made to accommodate the stayer phenomenon in the state of employment. All these were found to be very important in the estimation of the effect of scarring.

The Dynamics of Immigrant Welfare and Labor Market Behavior

This Paper analyzes transitions into and out of three different labor market states: social assistance, unemployment and employment. We estimate a dynamic multinomial logit model, controlling for endogenous initial conditions and unobserved heterogeneity, using a large representative Swedish panel data set, LINDA, for the years 1990-6. The unadjusted data indicates that immigrants are more likely to receive both social assistance and unemployment compensation than natives are. Immigrants are less likely to remain employed in consecutive years than natives are and are more likely to stay on and to receive unemployment insurance in any year, given participation in the previous year. The empirical results suggest that refugee immigrants display a greater degree of structural state dependence than natives. Further, immigrants from non-refugee countries display a similar degree of structural state dependence as natives. The high participation rates among refugee immigrants seem to be due to the existence of a welfare trap, while participation among natives and non-refugee immigrants is largely due to permanent unobserved characteristics. These results suggest that reforms will have differential effects on refugee immigrants and natives.