Current Research (A summary of my research is here)
Abstract: This paper shows the semiparametric identification of a binary choice model having an endogenous regressor without relying on outside instruments. A simple estimator and a test for endogeneity are provided based on this identification. These results are applied to analyze working age male's migration within the US, where labor income is potentially endogenous. Identification relies on the fact that the migration probability among workers is close to linear in age while labor income is nonlinear in age. Using data from the PSID, this study finds that labor income is endogenous and that ignoring this endogeneity leads to downward bias in the estimated effect of labor income on the migration probability.
Abstract: This paper proposes a method of nonparametrically identifying and estimating a binary random effects model along with the random effects distribution with cross section data. The functional form of the regression function and the distributions of the random effects and error term are all unknown. Identification is obtained by assuming that the random effects are binary and that the remaining error is symmetrically distributed. The proposed method is applied to identify features of alcohol consumption using a sample of healthy male drinkers in the United States.
Presentation slides at the 6th World Congress on Health Economics, Copenhagen, Denmark, 07/08-07/11, 2007
Latest version of the slides presented at the Boston College Dissertation Workshop, 11/16/2007
Abstract: Why do the insured use more health care? One obvious reason is that health care is cheaper for the insured. But additionally, having insurance can encourage unhealthy behavior via moral hazard. The effect of health insurance on medical utilization has been extensively studied; however, previous work has mostly ignored the effect of insurance on behavior and how that in turn affects medical utilization. This paper investigates these distinct effects. The increased medical utilization due to reduced prices may help the insured maintain good health, while that due to increased unhealthy behavior does not, so distinguishing these two effects has important policy implications.
This paper uses a two-period dynamic forward-looking model to derive the structural causal relationships among the decision to buy insurance, health behaviors (drinking, smoking, and exercise), and medical utilization. The model shows how exogenous changes in insurance prices and past behaviors can identify the direct and indirect effects of insurance on medical utilization. An empirical analysis also distinguishes between intensive and extensive margins (e.g., changes in the number of drinkers vs. the amount of alcohol consumed) of the insurance effect, which turns out to be empirically important.
Health insurance is found to encourage less healthy behavior, particularly heavy drinking, but this does not yield a short term perceptible increase in doctor or hospital visits. The effects of health insurance are primarily found at the intensive margin, e.g., health insurance may not cause a non-drinker to take up drinking, while it encourages a heavy drinker to drink even more. These results suggest that to counteract behavioral moral hazard, health insurance should be coupled with incentives that target individuals who currently engage in unhealthy behaviors, such as heavy drinkers.
Auxiliary Material Matlab Code
Abstract: Although most existing research concludes that grade retention generates no benefits for retainees' later academic performance, holding low achieving children back has been a popular practice for decades. Drawing on a recently collected nationally representative data set, the US Early Childhood Longitudinal Study - Kindergarten Cohort, this paper estimates the causal effect of kindergarten retention on the retained children's later academic performance.
Since children are observed being retained only when they enroll in schools that permit retention, this paper jointly models 1) the decision of entering a school allowing for kindergarten retention, 2) the decision of undergoing a retention treatment in kindergarten, and 3) children's academic performance in higher grades. The retention treatment is modeled as a binary choice with sample selection. The outcome equations are linear regressions including the kindergarten retention dummy as an endogenous regressor with a correlated random coefficient.
A control function approach is developed for the model estimation, which allows for unobserved heterogeneity in the retention effect. As a comparison, a nonparametric bias-corrected nearest neighbor matching estimator is also implemented. Holding children back in kindergarten is found to have positive but diminishing effects on their academic performance up to the third grade.
Weighted Least Square Estimation for Dummy Endogenous Treatment Models with Heterogeneous Treatment Effects
Abstract: This paper shows how the inverse density weighted least square approach proposed by Lewbel (2005) can be applied to the estimation of a general dummy endogenous treatment model with heterogeneous treatment effect. A data based trimming procedure is proposed to improve the finite sample performance of the estimator in this model's setup. Finite sample performance of this approach and the proposed trimming procedure are studied through Monte Carlo simulations. The proposed estimator is applied to estimating the effect of high school sophomores dropping out of high school on their later academic performance. Compared with the traditional control function and instrumental variable approaches, advantages of the proposed approach and the trimming procedure are found both in the experimental setting and in the application.
Previous Research
Selected Chinese Publications
Dong,Y., Ke, K. (2002), "Analysis of Credit Metrics Technique and Its Application in China", East China Economic Management, 16(6):19-22 (Second place, 2002 Excellent Paper Award from East China Economic Management).
Dong, Y., Qiang, L. (2003), "Ability v.s. Market--An Anatomy and Empirical Test on the Mutual Funds' Performance in China", Statistics& Information Tribute, 3: 23-26 (Excellent Conference Paper at the first Social Science Conference of Xi'an Jiaotong Univ.).
Dong, Y., Xue, F., Guan, W. (2004), "Applicability and Improvement of the KMV Model in Chinese Security Market", Productivity Research, (8):116-117, 184.
The other 7 published Chinese papers can be found through the search engine of China National Knowledge Infrastructure -- cnki.net: search results. If your browser does not support Chinese characters, see a snapshot.
