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Robert GARY-BOBO (CREST) – “Economies of Density, Group Synergies and Unobserved Heterogeneity: A Study of Home Care Services”

September 21 @ 3:00 pm - 4:15 pm
Microeconometrics Seminar: Every Tuesday
Time:  3:00pm -4:15pm
Date: 21th of September 2021
Room : 1004 et visio
Robert GARY-BOBO (CREST)  – “Economies of Density, Group Synergies and Unobserved Heterogeneity: A Study of Home Care Services”

Abstract: We study economies of density in the home-care services industry. In this industry, in essence, carers drive to visit patients scattered in a district and deliver various care services at the patient’s home. We use a unique dataset, with a standard panel structure, recording the hours of service and the exact number of miles traveled by each employee, every month, during several years and in many different districts (i.e., local branches). The estimated average transportation cost curves, giving the ratio of miles traveled per hour of service, as a function of hours of service, are typically U-shaped or convex and decreasing, thus exhibiting economies of density. These results are first obtained by means of simple log-linear models, using standard panel-data econometrics. We then study the unobserved heterogeneity of employees and use a quadratic-in-logs, finite mixture model with latent groups to uncover a finite number of employee types. The model and variants are estimated by EM and ML algorithms. Type-contingent average cost curves are also typically U-shaped (with variations), yielding an aggregate average transportation cost that is itself U-shaped. We discuss the choice of the appropriate number of latent groups, using information and entropy criteria to assess the quality of classification produced by the model. Economies of density are mainly due to group synergies operating at the district level. We also show that our model can be interpreted as a test of the Beardwood-Halton-Hammersley (1959) theorem of combinatorial optimization. With Bernard Bensaid (Groupe Avec) et Solen Croiset (Univ. Paris 1, CES).

Organizers:

Benoît SCHMUTZ (Pôle d’économie du CREST)
Anthony STRITTMATTER (Pôle d’économie du CREST)
Sponsors:
CREST