Panel Probit Model Research Articles

Does alcohol consumption cause poverty? Evidence from Vietnam

ABSTRACT This paper examines the impacts of alcohol expenditure on poverty. A main challenge of doing so is to remove the endogeneity arising from the bidirectional relationship between the two variables that seriously distorts the estimated correlation coefficients. This paper proves that an instrumental variable (IV) probit model outperforms the treatment effect and the panel probit models in terms of purging this endogeneity. When this IV probit model is applied to the Vietnamese data, the results show that alcohol expenditure increases the likelihood of consumers becoming poor; therefore, it is crucial to prioritize the regulation of alcohol spending as a fundamental element in the execution of poverty alleviation initiatives.

How Does Digital Inclusive Finance Affect Household Financial Vulnerability?

ABSTRACT Based on the China Health and Retirement Longitudinal Study (CHARLS) three-wave data (2013, 2015, and 2018), this paper constructs a panel Probit model to investigate the impact of digital inclusive finance on household financial vulnerability. The empirical results show that the development of digital inclusive finance can significantly reduce household financial vulnerability. For 1% increase in digital inclusive finance, the probability of household financial vulnerability decreases by 7.0%. The results are robust after addressing endogeneity issues and altering regression models, the dependent variable, and the independent variable. Through the influencing mechanism tests, this paper finds that digital inclusive finance reduces the financial vulnerability of households by reducing credit constraints, promoting entrepreneurship, and increasing risky asset holdings. The heterogeneous effects show that the vulnerability-mitigation effect of digital inclusive finance is more significant in better-educated and younger households and in urban and developed areas.

Can Servicification Benefit Manufacturing Exports? Empirical Results for India

To enhance manufacturing exports, India, a major player in the services segment, has recently created an enabling environment through the launch of several programmes, for example, the ‘Make-in-India’ and the production-linked incentive (PLI) schemes. As the firm-level evidence on the synergies between services input use (i.e., servicification) and manufacturing exports in the country is relatively scarce, the current analysis studies the relationship between them by using the CMIE-Prowess dataset over a period of 2000–2019, for both new and existing exporting firms. At the firm level, the article uses a two-step system generalized method of moments (GMM) estimator for studying the impact on export intensity, while a dynamic panel probit model is used to study the impacts on the decision to export. Apart from the analysis at the aggregate level, the influence of servicification is also judged for the low-tech and mid-to-hi-tech sectors separately and the disaggregated industry level. The observed positive relationship between servicification and manufacturing exports implies that the integration of competitiveness in the field of services with hi-tech manufacturing sectors can enhance India’s exports on the one hand and deepen firm-level global value chains participation on the other hand. JEL Codes: C23, F12, F14, F23, L25, L80

How does financial literacy affect households’ financial fragility? The role of insurance awareness

This paper investigates the impact of household heads' financial literacy on households' financial fragility. We estimate a panel probit model by employing panel data from four waves (2015, 2017, 2019, and 2021) of the China Household Finance Survey (CHFS) with 58,802 observations. We focus on the mediating role of insurance awareness. First, enhanced financial literacy significantly mitigates households’ financial fragility, with insurance participation emerging as a crucial mechanism. Second, our cross-sectional analyses show that the beneficial effects of financial literacy are more pronounced in households not constrained by wealth or cognitive skills, as well as households with lower health risks and those located in the central and western regions of China. Third, we identify that financial literacy, through its distinctive financial knowledge attributes, offers unique contributions to reducing household financial fragility, separate from general cognitive abilities. Last, we highlight peer effects in the influence of financial literacy on financial fragility, predominantly driven by social norms.

Language Barriers Impact on Trade Disputes: Evidence from the WTO Trade Disputes Cases

This study examines the impact of language barriers on trade disputes using a panel data set of 129 countries and 565 trade dispute cases from the World Trade Organization (WTO) spanning the years 1995 to 2018. The language barrier index is employed as a metric to assess the extent of language barriers between trade nations, while the panel probit model is utilized for conducting the empirical analysis. The empirical evidence indicates that language barriers exert a substantial and favorable impact on trade disputes. Language obstacles in trading countries have been found to heighten the probability of trade disputes, indicating that language barriers contribute to increase trade costs and hamper bilateral trade relations. Moreover, the Armington model is employed to elucidate the theoretical aspects of the impact of language barriers on trade disputes, with trade costs serving as the mediating factor. The findings of the study also validated the notion that linguistic barriers contribute to an elevated likelihood of trade disputes. This research study presents empirical findings regarding the influence of linguistic barriers on trade disputes. Additional investigation can be undertaken to examine the impact of language competency on trade disputes, given the substantial role that language plays in the realm of international trade.

폐교 활용 의사결정 요인 분석

Since 1982, when the Ministry of Education's small school consolidation policy was implemented, a total of 3,922 schools have been closed as of March 2023. Most of the previous studies have focused on analyzing cases and recommending how to utilize them. This study takes a quantitative approach by considering time to examine what factors are considered in the four types of management (non-utilization, self-utilization, lease and sale) after the decision to close. A panel probit model with sample selection bias was applied in three steps. The results showed that the age of the school and the total appraised value of the land and building are important factors in whether the school is utilized; land area, building area, land appraised value, population density, and population growth rate are important factors in whether the school is self-utilized; and land area, price, and financial independence are important factors in whether the school is sold. Through this study, we derived the selection factors that are important for the public sector, which must efficiently manage closed schools, and the private sector, which wants to earn profits by utilizing them and provide useful information for establishing policies necessary to efficiently manage closed schools.

Extreme events, economic uncertainty and speculation on occurrences of price bubbles in crude oil futures

This paper examines the impacts of extreme events, economic uncertainty and speculation on price bubbles in crude oil futures. For better forecast and estimate the positive/negative price bubbles of crude oil futures, the log-periodic power law singularity confidence multi-scale indicators application is used. The panel probit model examines impacts of extreme events, economic uncertainty and speculation on price bubbles in crude oil. The results show that the recent extreme events including Corona Virus Disease 2019 and Russia-Ukraine war significantly affect both positive/negative bubbles in crude oil futures. Measures of economic uncertainty significantly affect both positive/negative bubbles in the crude oil. However, the results find that the speculation significantly affect the positive bubbles and does not significantly affect the negative bubbles. Overall, extreme events, economic uncertainty, and speculation can all contribute to the occurrences of price bubbles in crude oil futures markets. This study provides new insights for the policy makers and market participants to monitor the occurrence of price bubbles.

Making monetary policy in Poland: Are Polish hawks and doves different?

In this study we analyse the voting behaviour of the Monetary Policy Committee (MPC) in Poland, applying a panel probit model using an original, hand-collected dataset of 48 MPC members and 168 votes from 2000 to 2022. We determine voting behaviour (hawkish vs. dovish) using personal characteristics of gender, age, education, previous career as well as the appointing institution for each member and shocks experienced in their working-age adulthood. We find that previous experience in politics and experience of the Polish transformation increases the probability of dovish behaviour. We also reveal evidence of a higher probability of hawkish votes from Senate appointees and former financial sector representatives. No other personal examined characteristics or experiences seem to influence Polish MPC members’ voting behaviour.

Analysis of the impact of global uncertainty on abnormal cross-border capital flows

This paper econometrically analyzes the effects of policy and financial uncertainty on abnormal cross-border capital flows with the panel probit model, further exploring the drivers of abnormal cross-border capital flows and their heterogeneity across economies. Results reveal that the occurrence of abnormal cross-border capital flows is clustered during periods of high uncertainty. Rising financial uncertainty significantly increases the probability of capital stops and retrenchments, whereas policy uncertainty does not have a positive impact on them. Abnormal cross-border capital flows in developed economies are more evenly driven by uncertainty, international and domestic factors than those in emerging economies, which are mainly affected by uncertainty.

Impacts of Aging Agricultural Labor Force on Land Transfer: An Empirical Analysis Based on the China Family Panel Studies

Aging is an important trend in the global demographic, with rural population aging becoming a significant challenge due to its faster pace and profound implications. Although the most significant impact of the aging agricultural labor force occurs in agricultural production and land use, little is known about their relationship. Based on the 2010–2018 data from the Chinese Family Panel Studies, this study uses the panel probit model to analyze the impact of the aging agricultural labor force on land transfer and tests its influence mechanism from the aspects of health effect and pension insurance effect. The results show the following: (1) there is an inverted U-shaped relationship between the aging of the agricultural labor force and land rent-in—with the deepening of the aging of the agricultural labor force, the aging of the agricultural labor force shifts from promoting land rent-in to inhibiting it; (2) there is a U-shaped relationship between the aging of the agricultural labor force and land rent-out—with the deepening of the aging of the agricultural labor force, the aging of the agricultural labor force shifts from inhibiting land rent-out to promoting it; and (3) the impact of the aging agricultural labor force on land rent-in and rent-out is significantly affected by farmers’ health levels, however pension insurance does not play a significant moderating role. Therefore, the government should strengthen the land transfer market and improve the level of pension insurance for the elderly rural agricultural labor force.

상속ㆍ증여가 임차가구의 자가전환에 미치는 영향에 관한 연구

In this study, the probit model explains the effect of inheritance and gift amounts on renters’ choice in housing tenure. The data is from the Korea National Survey of Tax and Benefit (NaSTaB). After left-censoring the renters as of 2010, we estimate the panel probit model to explore the effect of the amount of inheritance and gifts on people's tenure choices. As a result of the estimation, inheritance and gift amount variables have a statistically significant positive effect on the home buying behavior of rental households. When comparing their marginal effects, we find that the amount of inheritance has a more substantial effect when the total sample is used. In contrast, the gift amount variable has a more considerable effect when using the sub-sample that consists of either inheritance or gift or both. In the case of the renters’ home purchase decision, the financial support of parents and third parties may serve as an equity down payment. We present the policy recommendations to encourage behaviors related to inheritance and gifts that affect the redistribution of assets between generations.

Classical Approach to Zero-Inflated Dynamic Panel Ordered Probit Model with an Application in Drug Abuse

The Zero inflated ordered categorical data with time series structure are often a characteristic of behavioral research attributed to non-participation decision and zero consumption of substance such as drugs among the participants. The existing Semi-parametric zero inflated dynamic panel probit model with selectivity have exhibited biasness and inconsistency in estimators as a result of poor treatment of initial condition and exclusion of selectivity in the unobserved individual effects respectively. The model assumed that the cut points are known to address heaping in the data and therefore cannot be used when the cut points are unknown. In this paper, a Zero inflated dynamic panel ordered probit models have been developed to address the above challenges. Average partial effects that presents the impacts on the specific probabilities per unit change in the covariates are also given. Since the solutions are not of closed form, Maximum likelihood estimation based on Newton Raphson algorithm was used to estimate the parameters of the model. A Monte Carlo study was carried out to investigate some theoretical properties of the estimators in the models. The study found that the Zero inflated dynamic panel ordered probit models with independent and correlated error terms produced consistent estimators. The Zero inflated dynamic panel ordered probit models with independent and correlated error terms had more accurate estimators than the Dynamic panel ordered probit model. The Zero inflated dynamic panel ordered probit model with correlated error terms fitted the National Longitudinal Survey of Youth 1997 better than Zero inflated dynamic panel ordered probit model with independent error terms and Dynamic panel ordered probit model. The Zero inflated dynamic panel ordered probit model with independent error terms fitted the National Longitudinal Survey of Youth 1997 better the Dynamic panel ordered probit model.

Panel Probit Models with Time‐Varying Individual Effects: Reestimating the Effects of Fertility on Female Labour Participation*

AbstractThis paper considers a probit model for panel data in which the individual effects vary over time by interacting with unobserved factors. In estimation we adopt a correlated random effects approach for individual effects to get around the incidental parameter problem. This allows us to construct (asymptotically) unbiased estimators for average marginal effects (AMEs), which are often the ultimate quantities of interest in many empirical studies. We derive the asymptotic distributions for the AME estimators as well as provide the consistent estimators for their asymptotic variances. Next, we design a specification test for detecting whether individual effects are time‐varying or not, and establish the asymptotic distribution for the proposed test statistic under the null hypothesis of no time variation of individual effects. Monte Carlo simulations demonstrate satisfactory finite sample performance of our proposed method. An empirical application to study the effect of fertility on labour force participation (LFP) is provided. We find that fertility has a larger impact on female LFP in Germany than in the US during the 1980s. We also provide some new empirical evidence of a even stronger effect of fertility on LFP during the 2010s in Germany, which might call for a reconsideration of relevant policies recently enacted such as the subsidized child care programme.

Physical and psychological health at adolescence and home care use later in life.

ObjectivesTo examine the relation between physical and psychological health indicators at adolescence (age 18) and household, personal, and nursing home care use later in life at ages 57–69 years.MethodsUsing medical examinations on men born in 1944–1947 who were evaluated for military service at age 18 in the Netherlands, we link physical and psychological health assessments to national administrative microdata on the use of home care services at ages 57–69 years. We postulate a panel probit model for home care use over these years. In the analyses, we account for selective survival through correlated panel probit models.ResultsPoor mental health and being overweight at age 18 are important predictors of later life home care use. Home care use at ages 57–69 years is also highly related to and interacts with father’s socioeconomic status and recruits’ education at age 18.DiscussionSpecific health characteristics identified at age 18 are highly related to the later utilization of home-care at age 57–69 years. Some characteristics may be amenable to early life health interventions to decrease the future costs of long-term home care.

Effect of Parental Education on Child’s Schooling: A Case Study on Malawi’s Primary and Secondary School Children

A majority of prior studies have substantiated the intergenerational effects of maternal education on children, but study on the impact of paternal education on children’s educational achievements is limited. The purpose of this study is to examine the role of paternal education in children’s schooling based on the student’s gender, parents’ gender, and education level. The panel probit model is applied to the analysis based on World Bank’s Integrated Household Panel Survey. The estimated results illustrate that there is a positive correlation between the parents’ education level and children’s literacy. Specifically, a higher likelihood of children’s literacy is associated with paternal education than maternal education; fathers who had a university degree had more impact on their children’s literacy. There is a high probability of paternal education transmission to the daughter than the son. Parental education has a significant impact on children in the short and medium terms. The implication of these findings is that paternal education can be used as a suitable proxy for measuring children’s educational achievements in Malawi.

Can rainfall shocks enhance access to rented land? Evidence from Malawi

AbstractThis study investigates the spatial downside and upside rainfall shock effects on tenant household renting behavior and access to rented land in the short‐term and medium‐term. We model the tenant households’ demand decisions within the state‐contingent framework with renting‐in of land as a risky input choice. Our data are a 3‐year balanced household panel, combined with the corresponding seasonal district‐wise rainfall shock data across regional agro‐ecological zones in Malawi. Using the correlated and dynamic random effects panel probit and Tobit models that control for unobserved heterogeneity, spatial heterogeneities were revealed. Land rental markets were found to be more active in the Central Region of Malawi with intermediate population density. The 1‐year and 2‐year lagged downside rainfall shocks enhanced tenant households’ land access. For the more land constrained Southern Region of Malawi, with less prevalence of land rental markets, the 2‐year lagged downside rainfall shock is associated with less access to rented land. The revealed dynamic and spatial effects of covariate rainfall shocks on land rental market activity call for further studies on how policies could facilitate rental markets to enhance land‐use efficiency and land access for the most land‐constrained households in Malawi.

Predicting Individual Effects in Fixed Effects Panel Probit Models

Abstract Many applied settings in empirical economics require estimation of a large number of individual effects, like teacher effects or location effects; in health economics, prominent examples include patient effects, doctor effects or hospital effects. Increasingly, these effects are the object of interest of the estimation, and predicted effects are often used for further descriptive and regression analyses. To avoid imposing distributional assumptions on these effects, they are typically estimated via fixed effects methods. In short panels, the conventional maximum likelihood estimator for fixed effects binary response models provides poor estimates of these individual effects since the finite sample bias is typically substantial. We present a bias-reduced fixed effects estimator that provides better estimates of the individual effects in these models by removing the first-order asymptotic bias. An additional, practical advantage of the estimator is that it provides finite predictions for all individual effects in the sample, including those for which the corresponding dependent variable has identical outcomes in all time periods over time (either all zeros or ones); for these, the maximum likelihood prediction is infinite. We illustrate the approach in simulation experiments and in an application to health care utilization.

Mobility-related inequality in healthcare utilization between floating and native populations and its influencing factors: evidence from China.

Our goal was to examine inequality in healthcare utilization and the factors that contribute to inequality between China's floating and native populations. Based on the China Labor-force Dynamics Surveys from 2014 to 2018, which used three rounds of data, we utilized a panel probit model that included fixed effects for time and province to estimate the probability of healthcare utilization for floating and native populations. In addition, we calculated the degree of inequality in healthcare utilization by using the method of mobility-related inequality and a decomposition approach was used to explain the contribution of each factor to the inequality. The floating population utilized healthcare at a lower rate, with a 10.5% probability of visiting a hospital and a 20.9% probability of receiving hospitalized treatment. The concentration index of mobility-related inequality in healthcare utilization shows a negative coefficient of −0.137 for hospital visits and −0.356 for hospitalized treatment. Contribution decomposition shows that self-assessed health, job category and household registration account for the largest contribution to the inequality in hospital visits, contributing −0.038, 0.021 and −0.017, respectively. Age, household registration and insurance account for the largest contribution to the inequality in hospitalized treatment, contributing −0.053, 0.024 and −0.023, respectively. The floating population was less likely to use health services and faced an inequality in treatment compared with the native population.

The effects of home visiting on mother-child interactions: Evidence from a randomized trial using dynamic micro-level data

BackgroundHome visiting programs constitute an important policy to support vulnerable families with young children. One of their principal aims is to improve infant-parent relationships, so a key measure of their effectiveness is based on observational measures of parent-children interactions. In the present study we provide novel evidence on the effectiveness of home visiting programs in improving mother-child interactions within a randomized controlled trial (RCT) of the Pro Kind program. A major goal of the Pro Kind program is to promote child development by strengthening the intuitive parenting skills of mothers. On this basis, the following research question is addressed in this paper: What is the impact of the Pro Kind home visitation program on the quality of mother-child interaction? MethodsA randomly chosen subsample of the original sample was selected to participate on video recordings. This subsample of 109 mother-child dyads was videotaped during a 3-min typical play situation at the participants’ homes when the child was aged 25 months. We use a novel micro-coding system which allows us to examine how the intervention affected the dynamic feedback responses of both mothers and children in three key measures of behavior: orientation, positive contingency, and negative/lack of contingency. The analysis was conducted using a set of static probit models and dynamic cross-lagged panel probit models for each measure. ResultsThe intervention significantly improved the interactions between girls and their mothers, by increasing the prevalence of orientation and positive contingency (and reducing that of negative/lack of contingency). This was achieved by increasing both the persistence of positive behaviors and also the probability of switching from negative to positive behaviors in the treatment group. Mixed impacts were detected for boys. ConclusionsOverall, it can be said that the Pro Kind program has a positive impact on the quality of mother-daughter interaction. However, our findings might also influence the design and delivery of home visiting programs, to the extent that they suggest that more attention has to be devoted to the interactions between boys and their mothers. Furthermore, the results show the importance of careful dynamic modelling of interactions data from videotaped observations to have a more complete understanding of the effectiveness of home visiting programs.

Impact of Climate Change Adaptation on Household Food Security in Nigeria—A Difference-in-Difference Approach

Studies have shown that climate change adaptation options (CCA) are implemented to buffer the unfavorable climatic changes in Nigeria causing a decline in food security. Against the background of measuring the impact of CCA options using cross-sectional data, this study assessed how CCA had affected food security using panel data on farming households from 2010–2016 obtained from Nigerian General Household Survey (GHS). Data were analyzed using the Panel probit model (PPM), Propensity Score Matching (PSM), and Difference-in-Difference (DID) regression. PPM showed that the probability of adopting CCA options increased with farm size (p < 0.01), extension contact (p < 0.01), and marital status (p < 0.01), but decreased with the age of the household head (p < 0.01). Credit facilities (p < 0.05), ownership of farmland (p < 0.01), household size (p < 0.01), years of schooling (p < 0.01), household asset (p < 0.01), and location (p < 0.05) also had a significant but mixed effect on CCA choices. PSM revealed that farming households that adopted CCA strategies had 9% higher food security levels than non-adopters. Furthermore, the result of the DID model revealed a significant positive effect of CCA on household food security (β = 5.93, p < 0.01). It was recommended that education and provision of quality advisory services to farmers is crucial to foster the implementation of CCA options.