Multi-sample analysis of moment-structures: Asymptotic validity of inferences based on second-order moments

In moment structure analysis with nonnormal data, asymptotic valid inferences require the computation of a consistent (under general distributional assumptions) estimate of the matrix $\Gamma$ of asymptotic variances of sample second--order moments. Such a consistent estimate involves the fourth--order sample moments of the data. In practice, the use of fourth--order moments leads to computational burden and lack of robustness against small samples. In this paper we show that, under certain assumptions, correct asymptotic inferences can be attained when $\Gamma$ is replaced by a matrix $\Omega$ that involves only the second--order moments of the data. The present paper extends to the context of multi--sample analysis of second--order moment structures, results derived in the context of (simple--sample) covariance structure analysis (Satorra and Bentler, 1990). The results apply to a variety of estimation methods and general type of statistics. An example involving a test of equality of means under covariance restrictions illustrates theoretical aspects of the paper.

Some hypothesis tests for the covariance matrix when the dimension is large compared to the sample size

This paper analyzes whether standard covariance matrix tests work whendimensionality is large, and in particular larger than sample size. Inthe latter case, the singularity of the sample covariance matrix makeslikelihood ratio tests degenerate, but other tests based on quadraticforms of sample covariance matrix eigenvalues remain well-defined. Westudy the consistency property and limiting distribution of these testsas dimensionality and sample size go to infinity together, with theirratio converging to a finite non-zero limit. We find that the existingtest for sphericity is robust against high dimensionality, but not thetest for equality of the covariance matrix to a given matrix. For thelatter test, we develop a new correction to the existing test statisticthat makes it robust against high dimensionality.

What social security: Beveridgean or Bismarckian?

Why are Bismarckian social security systems associated with largerpublic pension expenditures, a smaller fraction of private pension andlower income in-equality than Beveridgean systems? These facts arepuzzling for political economy theories of social security whichpredict that Beveridgean systems, involving intra-generationalredistribution, should enjoy larger support among low-income people andthus be larger. This paper explains these features in a bidimensionalpolitical economy model. In an economy with three income groups,low-income support a large, redistributive system; middle-income favoran earning-related system, while high-income oppose any public system,since they have access to a superior saving technology, a privatesystem. We show that, if income inequality is large, the voting majorityof high-income and low-income supports a (small) Beveridgean system,and a large private pillar arises; the opposite occurs with lowinequality. Additionally, when the capital market provides higherreturns, a Beveridgean system is more likely to emerge.

How enforcement institutions affect markets

In an experiment we study market outcomes under alternative incentive structures for third-party enforcers. Our transactions resemble an anonymous credit market where lenders can give loans and borrowers can repay them. When borrowers default, judges are free to enforce repayment but are themselves paid differently in each of three treatments. First, paying judges according to lenders votes maximizes surplus and the equality of earnings. In contrast, paying judges according to borrowers votes triggers insufficient enforcement, destroying the market and producing the lowest surplus and the most unequal distribution of earnings. Lastly, judges paid the average earnings of borrowers and lenders achieve results close to those based on lender voting. We employ a steps-of-reasoning argument to interpret the performances of different institutions. When voting and enforcement rights are allocated to different classes of actors, the difficulty of their task changes, and arguably as a consequence they focus on high or low surplus equilibria.

Relative payoffs and happiness: An experimental study

Some current utility models presume that people are concerned with their relative standing in a reference group. If this is true, do certain types care more about this than others? Using simple binary decisions and self-reported happiness, we investigate both the prevalence of ``difference aversion'' and whether happiness levels influence the taste for social comparisons. Our decision tasks distinguish between a person s desire to achieving the social optimum, equality or advantageous relative standing. Most people appear to disregard relative payoffs, instead typically making choices resulting in higher social payoffs. While we do not find a strong general correlation between happiness and concern for relative payoffs, we do observe that a willingness to lower another person s payoff below one s own (competitive preferences) seems correlated with unhappiness.

Why do differences in the degree of fiscal decentralization endure?

A notable difference between the U.S. and many countries in Europe is in the degree of fiscal decentralization. Regional (and local) governments in the U.S. have significant autonomy in setting their own taxes and determining how to spend their revenues. This is not true of their counterparts in Spain, France, the United Kingdom, Czech Republic and many other European countries. In recent years, many countries formerly subject to dictatorshipsor communism have been considering decentralizing fiscal responsibility to sub-national governments as part of the process of democratization (see Bird and Ebel, forthcoming). Yet, much of Europe remains immune to adopting effective decentralization in which sub-national units have true taxing authority.

On the sources of the Great Moderation

The remarkable decline in macroeconomic volatility experienced by the U.S. economy since the mid-80s (the so-called Great Moderation) has been accompanied by large changes in the patterns of comovements among output, hours and labor productivity. Those changes are reflected in both conditional and unconditional second moments as well as in the impulse responses to identified shocks. That evidencepoints to structural change, as opposed to just good luck, as an explanation for the Great Moderation. We use a simple macro model to suggest some of the immediate sources which are likely to be behindthe observed changes.

Radial measures of public services deficit for regional allocation of public funds

The goal of this paper is to present an optimal resource allocation model for the regional allocation of public service inputs. Theproposed solution leads to maximise the relative public service availability in regions located below the best availability frontier, subject to exogenous budget restrictions and equality ofaccess for equal need criteria (equity-based notion of regional needs). The construction of non-parametric deficit indicators is proposed for public service availability by a novel application of Data Envelopment Analysis (DEA) models, whose results offer advantages for the evaluation and improvement of decentralised public resource allocation systems. The method introduced in this paper has relevance as a resource allocation guide for the majority of services centrally funded by the public sector in a given country, such as health care, basic and higher education, citizen safety, justice, transportation, environmental protection, leisure, culture, housing and city planning, etc.

The size and distribution of donations: Effects of numbers of potential recipients

Whereas much literature exists on choice overload, little is known about effects of numbers of alternatives in donation decisions. How do these affect both the size and distribution of donations? We hypothesize that donations are affected by the reputation of recipients and increase with their number, albeit at a decreasing rate. Allocations to recipients reflect different concepts of fairness equity and equality. Both may be employed but, since they differ in cognitive and emotional costs, numbers of recipients are important. Using a cognitive (emotional) argument, distributions become more uniform (skewed) as numbers increase. In a survey, respondents indicated how they would donate lottery winnings of 50 Euros. Results indicated that more was donated to NGO s that respondents knew better. Second, total donations increased with the number of recipients albeit at a decreasing rate. Third, distributions of donations became more skewed as numbers increased. We comment on theoretical and practical implications.

The macroeconomic effects of oil price shocks: Why are the 2000s so different from the 1970s?

We characterize the macroeconomic performance of a set of industrialized economies in the aftermath of the oil price shocks of the 1970s and of the last decade, focusing on the differences across episodes. We examine four different hypotheses for the mild effects on inflation and economic activity of the recent increase in the price of oil: (a) good luck (i.e. lack of concurrent adverse shocks), (b) smaller share of oil in production, (c) more flexible labor markets, and (d) improvements in monetary policy. Weconclude that all four have played an important role.

Fums desiguals. Comentari a la STSJC, Sala Civil i Penal, 31.3.2008 (MP: Ma. Eugènia Alegret Burgués)

L'objecte del plet són els requisits necessaris per a la instal·lació d¿una xemeneia per a l'evacuació dels fums del local situat en els baixos d'un edifici en règim de propietat horitzontal. La matèria no és nova, però la STSJC de 31 de març de 2008 suposa un canvi de criteri jurisprudencial en relació amb la STSJC de 15 de gener de 2005, que la Sala ha de justificar per evitar la infracció del principi d¿igualtat en l¿aplicació de la llei.

Socio-economic inequalities in reported depression in Spain : a decomposition approach

Recent evidence questions some conventional view on the existence of income-related inequalities in depression suggesting in turn that other determinants might be in place, such as activity status and educational attainment. Evidence of socio-economic inequalities is especially relevant in countries such as Spain that have a limited coverage of mental health care and are regionally heterogeneous. This paper aims at measuring and explaining the degree of socio-economic inequality in reported depression in Spain. We employ linear probability models to estimate the concentration index and its decomposition drawing from 2003 edition of the Spanish National Health Survey, the most recent representative health survey in Spain. Our findings point towards the existence of avoidable inequalities in the prevalence of reported depression. However, besides ¿pure income effects¿ explaining 37% of inequality, economic activity status (28%), education (15%) and demographics (15%) play also a key encompassing role. Although high income implies higher resources to invest and cure (mental) illness, environmental factors influencing in peoples perceived social status act as indirect path as explaining the prevalence of depression. Finally, we find evidence of a gender effect, gender social-economic inequality in income is mainly avoidable.

Educational expansion, intergenerational mobility and over-education

[eng] There is a vast literature on intergenerational mobility in sociology and economics. Similar interest has emerged for the phenomenon of over-education in both disciplines. There are no studies, however, linking these two research lines. We study the relationship between social mobility and over-education in a context of educational expansion. Our framework allows for the evaluation of several policies, including those affecting social segregation, early intervention programs and the power of unions. Results show the evolution of social mobility, over-education, income inequality and equality of opportunity under each scenario.

Parents’ Investments and Education Returns

[cat] Aquest article analitza la relació entre els ingressos dels pares i l’educació dels seus fills. En un context d’altruïsme perfecte, el model descriu les decisions dels pares sobre quant consumir i quant invertir en l’educació dels seus fills. El model prediu que els rendiments de l’educació en termes de sous haurien de ser lineals. Usant aquest model en una economia competitiva, es mostra com el resultat depèn dels subsidis o impostos del govern sobre l’educació. El compromís habitual igualtat-eficiència apareix en aquest context. Finalment, el model dóna intuïcions sobre la relació entre educació i productivitat.