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Title:Analytical Prediction of Transitions Probabilities in the Conditional Logit Model PDF Logo
Authors:Bonin, Holger
Schneider, Hilmar
Issue Date:2004
Series/Report no.:IZA Discussion paper series 1015
Abstract:The paper derives analytical transitions probabilities following an exogenous shock to the deterministic component in the conditional logit model. The solution draws on the postestimation distribution of the models stochastic component, identified on the basis of a direct utility maximization interpretation of agents revealed choice. Computational experiments confirm that analytical prediction of transitions probabilities might perform substantially better than the established calibration method with few repetitions. However, results obtained in an empirical application studying labor supply responses to social insurance reform in Germany suggest that previous calibration-based results accurately indicate the direction of incentive effects, while underpredicting small transitions frequencies.
Subjects:conditional logit model
logistic distributions
behavioral microsimulation
social insurance reform
Document Type:Working Paper
Appears in Collections:IZA Discussion Papers, Forschungsinstitut zur Zukunft der Arbeit (IZA)

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