Identifying Individual and Group Effects in the Presence of Sorting: A Neighborhood Effects Application

Researchers have long recognized that the non-random sorting of individuals into groups generates correlation between individual and group attributes that is likely to bias naive estimates of both individual and group effects. This paper proposes a non-parametric strategy for identifying these effects in a model that allows for both individual and group unobservables, applying this strategy to the estimation of neighborhood effects on labor market outcomes. The first part of this strategy is guided by a robust feature of the equilibrium in the canonical vertical sorting model of Epple and Platt (1998), that there is a monotonic relationship between neighborhood housing prices and neighborhood quality. This implies that under certain conditions a non- parametric function of neighborhood housing prices serves as a suitable control function for the neighborhood unobservable in the labor market outcome regression. The second part of the proposed strategy uses aggregation to develop suitable instruments for both exogenous and endogenous group attributes. Instrumenting for each individual's observed neighborhood attributes with the average neighborhood attributes of a set of observationally identical individuals eliminates the portion of the variation in neighborhood attributes due to sorting on unobserved individual attributes. The neighborhood effects application is based on confidential microdata from the 1990 Decennial Census for the Boston MSA. The results imply that the direct effects of geographic proximity to jobs, neighborhood poverty rates, and average neighborhood education are substantially larger than the conditional correlations identified using OLS, although the net effect of neighborhood quality on labor market outcomes remains small. These findings are robust across a wide variety of specifications and robustness checks.

Extracting more out of relocation data: building movement models as mixtures of random walks

We present a framework for fitting multiple random walks to animal movement paths consisting of ordered sets of step lengths and turning angles. Each step and turn is assigned to one of a number of random walks, each characteristic of a different behavioral state. Behavioral state assignments may be inferred purely from movement data or may include the habitat type in which the animals are located. Switching between different behavioral states may be modeled explicitly using a state transition matrix estimated directly from data, or switching probabilities may take into account the proximity of animals to landscape features. Model fitting is undertaken within a Bayesian framework using the WinBUGS software. These methods allow for identification of different movement states using several properties of observed paths and lead naturally to the formulation of movement models. Analysis of relocation data from elk released in east-central Ontario, Canada, suggests a biphasic movement behavior: elk are either in an "encamped" state in which step lengths are small and turning angles are high, or in an "exploratory" state, in which daily step lengths are several kilometers and turning angles are small. Animals encamp in open habitat (agricultural fields and opened forest), but the exploratory state is not associated with any particular habitat type.