THE DYNAMICS OF CAR AVAILABILITY IN EU COUNTRIES: A Comparison Based on the European Household Panel Survey

This paper investigates the dynamics of car availability in EU countries. Of particular interest is the relative contribution of state dependence, heterogeneity and serial correlation. A dynamic probit model with unobservable heterogeneity is estimated using eight (1994–2001) waves of European Community Household Panel surveys. Car availability is expressed as a function of income and a number of social-demographic factors. The dynamic probit model is estimated using simulated maximum likelihood (MSL) estimation, to overcome the computational difficulties inherent in maximum likelihood estimation of models with nontrivial error structures. The results indicate that car availability is characterized by significant state dependence, unobserved heterogeneity and negative serial correlation in the error component.