Waterloo economics series | 2022

#21-001 --Alina Garnham and Derek Stacey

Fighting for Fares: Uber and the Declining Market Price of Licensed Taxicabs 

Abstract

In this paper, we study how the emergence of Uber in a large North American city affects the financial value of taxicab licenses. A taxicab license provides a claim to a stream of dividends in the form of rents generated by operating the taxicab or leasing the license. The introduction of Uber undoubtedly affects the anticipated stream of dividends because Uber drivers capture part of the farebox revenue that might otherwise go to the owners/drivers of licensed taxicabs. At the same time, the launch of Uber's innovative technology-driven approach to the provision of ride-hailing services can be viewed as a partial obsolescence of the traditional taxicab approach. The economic incentives facing market participants may therefore change as Uber gains momentum in the ride-hailing market, which could further affect the market value of licensed taxicabs. Using transaction-level data, we apply a theory of asset pricing to the secondary market for Toronto taxicab licenses to explore these potential price effcts. We learn that both the farebox and innovation effects contribute to the overall decline in market value, with the farebox effect accounting for just over half of the $170K price decline from 2011 to 2017. We explore the welfare implications for taxicab license owners with counterfactual simulations. We find that,  consistent with the anti-Uber protests organized by Toronto taxi drivers, there was a high willingness to pay among license holders to prevent or postpone the launch of Uber's ridesharing services.

JEL Classification

G12

#22-002 --Sergio Firpo, Antonio. F. Galvao, Thomas Parker

Uniform inference for value functions

Abstract

We propose a method to conduct uniform inference for the (optimal) value function, that is, the function that results from optimizing an objective function marginally over one of its arguments. Marginal optimization is not Hadamard differentiable (that is, compactly differentiable) as a map between the spaces of objective and value functions, which is problematic because standard inference methods for nonlinear maps usually rely on Hadamard differentiability. However, we show that the map from objective function to an $L_p$ functional of a value function, for $1 \leq p \leq \infty$, are Hadamard directionally differentiable. As a result, we establish consistency and weak convergence of nonparametric plug-in estimates of Cramer-von Mises and Kolmogorov-Smirnov test statistics applied to value functions. For practical inference, we develop detailed resampling techniques that combine a bootstrap procedure with estimates of the directional derivatives. In addition, we establish local size control of tests which use the resampling procedure. Monte Carlo simulations assess the nite-sample properties of the proposed methods and show accurate empirical size and nontrivial power of the procedures. Finally, we apply our methods to the evaluation of a job training program using bounds for the distribution function of treatment effects.

JEL Classification

C12, C14, C21

#22-003  --Carlos Lamarche and Thomas Parker

Wild Bootstrap Inference for Penalized Quantile Regression For Longitudinal Data

Abstract

The existing theory of penalized quantile regression for longitudinal data has focused primarily on point estimation. In this work, we investigate statistical inference. We propose a wild residual bootstrap  procedure and show that it is asymptotically valid for approximating the distribution of the penalized  estimator. The model puts no restrictions on individual effects, and the estimator achieves consistency  by letting the shrinkage decay in importance asymptotically. The new method is easy to implement and simulation studies show that it has accurate small sample behavior in comparison with existing  procedures. Finally, we illustrate the new approach using U.S. Census data to estimate a model that  includes more than eighty thousand parameters.

JEL Classification

C15, C21, C23

#22-004  --Ana Ferrer, Annie Pan and Tammy Schirle

The Work Trajectories of Married Canadian Immigrant Women, 2006-2019

Abstract

The behaviour of married immigrant women regarding fertility and labour markets is an essential piece to understand the economic and cultural integration of immigrant households. However, the contribution of married immigrant women to the Canadian labour market was – until recently – considered of secondary importance and their labour market choices studied within a framework of temporary attachment to the labor force. Recent research, however, finds that a significant fraction of married immigrant women make labor supply decisions (and face barriers) similar to those of native-born married women. We show that this is the case in Canada as well, by estimating the progress of immigrant women over the 2000s. We use traditional measures of labour market attachment, such as participation, employment and wages, but also novel measures of labour market dynamics, such as transitions across labour market states. Differences in transition rates can reveal higher fragility of work for immigrant women, or reveal the extent to which immigrant women respond to family income shocks – the added worker effect. Results show that immigrant women are less likely to transition into employment - more likely to transition out of employment to either unemployment or inactivity – and more likely to respond to income shocks than the Canadian born. There is evidence of a gradual convergence with years spent in Canada to the outcomes of the Canadian born, which is much slower for immigrant women than immigrant men.

#22-005  --Ana Ferrer and Allison Mascella

Immigrant gaps in parental time investments into children’s human capital activities

Abstract

Current and future well-being and economic prosperity of children depend in large part on the nuances of decisions made by parents with respect to familial resources, an important part of which regard the time spent in the company of children. We estimate differences in the time that immigrant and Canadian-born parents allocate to child-care activities relative to other activities using the time diaries from the General Social Survey. We find that mothers born abroad spend more time at work and less time in leisure but there is no significant difference in time devoted to household production or child service between them and Canadian-born mothers. Despite not finding differences by immigration status in the total care-time parents provide for their children, we do find significant differences - by immigrant status - in time specifically devoted to human capital investment activities with children: African, Asian, European and South-Central American mothers spend up to 30 more minutes daily in these activities than the Canadian born. We further assess the patterns of time use of second-generation young adults and find that they spend more time on education and homework compared to third generation or higher young adults. This supports a plausible effect of the time invested in children’s human capital generating activities by immigrant parents on their Canadian-born children.

#22-006  --Alicia Adsera, Ana Ferrer and Virginia Herranz

Descriptive labour market outcomes of immigrant women across Europe

Abstract

We consider the job progression of immigrant women in five European countries: France, Italy, Spain, Sweden and the UK. We complement data from the European Labour Force Survey (2005-2015), with information about the skills contained in the jobs held by women, using data from the O*Net. In particular, we focus on analytical and strength skills in immigrant´s jobs and compare them to those required by jobs held by similar native women. Even though immigrants experience upon arrival a gap in participation relative to the native born, they gradually increase participation during the first ten years spent in the country (approximately, 1% per year in Spain, Italy and the UK, and 2% and 4 % per year in France and Sweden respectively). Our results reveal significant differences across countries of origin as well as differences within countries over the period of analysis. Recent immigrant women show relatively large gaps in the analytical skill content of the jobs they held relative to native-born women across our host countries. Further, with the exception of immigrants to Spain, they also work jobs with higher requirements of strength than their native-born counterparts do. Although educated immigrants show a different pattern in most countries (included Spain). We find differences within countries over the period of analysis that may be consistent with the variation of incentives to move depending on the business cycle at arrival - particularly given the meager opportunities in many destination countries during aftermath of the recent great recession.

#22-007 -- Clemens Possnig, Andreea Rotarescu, and Kyungchul Song

Estimating Dynamic Spillover Effects Along Multiple Networks in a Linear Panel Model

Abstract

Spillover of economic outcomes often arises over multiple networks, and distinguishing their separate roles is important in empirical research. For example, the direction of spillover between two groups (such as banks and industrial sectors linked in a bipartite graph)has important economic implications, and a researcher may want to learn which direction is supported in the data. For this, we need to have an empirical methodology that allows for both directions of spillover simultaneously. In this paper, we develop a dynamic linear panel model and asymptotic inference with large n and small T, where both directions of spillover are accommodated through multiple networks. Using the methodology developed here, we perform an empirical study of spillovers between bank weakness and zombie-firm congestion in industrial sectors, using firm-bank matched data from Spain between 2005 and 2012. Overall, we find that there is positive spillover in both directions between banks and sectors.

JEL Classification 

C12, C21, C31, E44, G21, G32