The Palestinian Economy. Theoretical and Practical Challenges

358
Abu-Zaineh – Mataria
and E ( y ) E ( P *)* E ( y * / P 1)
(3)
i
i
i
i
Eq. (1) describes the decision to use health care; Eq. (2) quantifies the level of
conditional use – being specified as a zero-truncated negative binomial distribution
with a log link relation, and Eq. (3) provides the unconditional usage (Buntin and
Zaslavsky 2004). Hence,
i 1 , i 1 , i
EP ( ) G x b m d
(4)
i i 2i , 2i ,
E( y / P 1)
F x m
(5)
ˆ ˆ
, ,
ˆ
,
ˆ
,
yˆi G x 1 i
bm 1 i
d F x 2 i
m
2 i
participation
conditional use
(6)
where the parameters ( bˆ , ˆ , dˆ ,ˆ ) represent the average behaviour of the population. In
order to take into account potential heterogeneity in behaviour across the income groups,
Eq. (6) can be re-estimated for each SES group (g) as follows,
ˆ ˆ
, ,
ˆ
,
ˆ
,
yˆg G x 1i
b g
m 1i
d g
F x 2i g
m
2i g
participation
conditional use
(7)
where g could represent different income-quintile (Oaxaca 1973; Benham and Benham
1975).
Since our parameters are estimated using nonlinear functions, the decomposition
methods proposed by the ECuity group cannot immediately be applied. Therefore, we opt
to employ an incremental approach of decomposition using microsimulation technique –
see below.