A PANEL DATA APPROACH FOR PROGRAM EVALUATION: MEASURING THE BENEFITS OF POLITICAL AND ECONOMIC INTEGRATION OF HONG KONG WITH MAINLAND CHINA

We propose a simple‐to‐implement panel data method to evaluate the impacts of social policy. The basic idea is to exploit the dependence among cross‐sectional units to construct the counterfactuals. The cross‐sectional correlations are attributed to the presence of some (unobserved) common factors. However, instead of trying to estimate the unobserved factors, we propose to use observed data. We use a panel of 24 countries to evaluate the impact of political and economic integration of Hong Kong with mainland China. We find that the political integration hardly had any impact on the growth of the Hong Kong economy. However, the economic integration has raised Hong Kong's annual real GDP by about 4%. Copyright © 2011 John Wiley & Sons, Ltd.     

Smoking Habits: Like Father,Like Son,Like Mother,Like Daughter?*

We use instrumental variable methods to investigate whether the impact of parental smoking habits on their children's smoking decisions is a causal one. We find suggestive evidence of same‐sex role models in two‐parent households: mothers play a more crucial role in determining their daughters’ smoking decisions, whereas fathers’ smoking habits are primarily imitated by their sons. This same‐sex parent–child link is no longer at play for teenagers living in single‐mother households, for whom the influence of their only cohabiting parent turns out to be predominant independently of gender.     

Would the Bundesbank have prevented the Great Inflation in the United States?

Policy counterfactuals based on estimated structural VARs routinely suggest that bringing Alan Greenspan back in the 1970s United States would not have prevented the Great Inflation. We show that a standard policy counterfactual suggests that the Bundesbank—which is near-universally credited for sparing West Germany the Great Inflation—would also not have been able to prevent the Great Inflation in the United States.The implausibility of this result sounds a cautionary note on taking the outcome of SVAR-based policy counterfactuals at face value, and raises questions on the reliability of such exercises.     

Modeling and calculating the effect of treatment at baseline from panel outcomes

We propose and examine a panel data model for isolating the effect of a treatment, taken once at baseline, from outcomes observed over subsequent time periods. In the model, the treatment intake and outcomes are assumed to be correlated, due to unobserved or unmeasured confounders. Intake is partly determined by a set of instrumental variables and the confounding on unobservables is modeled in a flexible way, varying both by time and treatment state. Covariate effects are assumed to be subject-specific and potentially correlated with other covariates. Estimation and inference is by Bayesian methods that are implemented by tuned Markov chain Monte Carlo methods. Because our analysis is based on the framework developed by Chib [2004. Analysis of treatment response data without the joint distribution of counterfactuals. Journal of Econometrics, in press], the modeling and estimation does not involve either the unknowable joint distribution of the potential outcomes or the missing counterfactuals. The problem of model choice through marginal likelihoods and Bayes factors is also considered. The methods are illustrated in simulation experiments and in an application dealing with the effect of participation in high school athletics on future labor market earnings.     

A distributional synthetic control method for policy evaluation

We extend the synthetic control method to evaluate the distributional effects of policy intervention in the possible presence of poor matching. The counterfactuals (or intervention effects) are identified by matching a vector of pre-intervention quantile residuals of the treated unit and a convex combination of its potential-control counterparts. The residuals are orthogonal to a set of observable common factors that control for the potentially poor matching. We also apply our method to a set of case studies that explore the distributional effects of state-level minimum-wage hikes in the USA.     

Middle Manager Leadership and Frontline Employee Performance: Bypass,Cascading, and Moderating Effects

We investigated the relationship between middle managers' transformational leadership and the performance of frontline employees who are two levels below the middle managers. We identified two pathways through which this cross‐level influence occurs and tested two moderators operating on these two pathways. The first pathway is a direct effect from middle managers to employees, bypassing the influence of employees' immediate supervisor (the bypass effect). We further hypothesized that the bypass effect is moderated by the employees' collectivistic value. The second pathway is a cascading of leadership behaviours from middle managers to first‐line supervisors, whose transformational leadership then enhances employees' performance (the cascading effect). We further hypothesized that this cascading effect is moderated by the supervisors' power distance value. These hypotheses were tested with a sample of 491 frontline employees, 98 frontline supervisors, and 30 middle managers in three organizations in China. The three‐level hierarchical linear modelling results supported the four hypotheses.     

Identifying technically efficient fishing vessels: a non‐empty,minimal subset approach

Stochastic frontier models are often employed to estimate fishing vessel technical efficiency. Under certain assumptions, these models yield efficiency measures that are means of truncated normal distributions. We argue that these measures are flawed, and use the results of Horrace ( 2005 ) to estimate efficiency for 39 vessels in the Northeast Atlantic herring fleet, based on each vessel's probability of being efficient. We develop a subset selection technique to identify groups of efficient vessels at pre‐specified probability levels. When homogeneous production is assumed, inferential inconsistencies exist between our methods and the methods of ranking the means of the technical inefficiency distributions for each vessel. When production is allowed to be heterogeneous, these inconsistencies are mitigated. Copyright © 2007 John Wiley & Sons, Ltd.     

Training at IBM's human resource service center: linking people,technology, and HR processes

IBM's Human Resource Service Center (HRSC) delivers centralized human resource operational support to over 500,000 IBM employees and retirees (including spouses and dependents). Its success is attributed to a skilled workforce focused on technology and end‐to‐end HR program support. Technology allows the Center to handle high volumes of customer requests while offering self‐service options and tiered support. Training is key to delivering quality service center support. This article describes the HRSC's methods to train customer service representatives and program specialists as well as the training challenges. © 1999 John Wiley & Sons, Inc.     

Adjusting for Non‐Response in Population‐Based Case‐Control Studies

In this paper we discuss the analysis of data from population‐based case‐control studies when there is appreciable non‐response. We develop a class of estimating equations that are relatively easy to implement. For some important special cases, we also provide efficient semi‐parametric maximum‐likelihood methods. We compare the methods in a simulation study based on data from the Women's Cardiovascular Health Study discussed in Arbogast et al. (Estimating incidence rates from population‐based case‐control studies in the presence of non‐respondents, Biometrical Journal 44, 227–239, 2002).     

Quotas,Productivity, and Prices: The Case of Anchovy Fishing

I exploit a 2009 reform that introduced individual fishing quotas (catch shares) for Peruvian anchovy—the largest fishery in the world—to assess the causal impact of production quotas on within‐firm productivity and market prices. Unique features of the data allow me to create two alternative counterfactuals: (i) anchovy fishing operations in a region of the country that was mandated to implement quotas with a delay, and (ii) variation in quota allocations across ships. I find that quotas do not increase within‐asset or within‐firm productivity in quantities. Instead, a 200% increase in anchovy prices benefits extraction firms through higher revenues, consistent with two mechanisms enacted by individual fishing quotas: more orderly industry operations reducing excess supply and an increase in bargaining power of extraction firms with respect to fish‐processing. Several market characteristics across geographies differentially affect market prices after the quota regime. Supplementary evidence on fewer operational infractions, higher product quality, and a lower banking delinquency observed during the quota regime suggests the existence of efficiency gains rather than purely rent transfers.     

THE DISTANCE PUZZLE AND LOW‐INCOME COUNTRIES: AN UPDATE

The ‘distance effect' measuring the elasticity of trade flows to distance has been found to be rising since the early 1970s in a host of studies based on the gravity model, leading observers to call it the ‘distance puzzle'. However, this puzzle is regularly challenged by new developments in the specification of the gravity equation or in its estimations. We propose an original survey on the existing methods used to quantify the distance puzzle – basically the computation of an average distance of trade, a meta‐analysis on existing gravity papers and the implementation of recent econometric developments, all on a well‐specified gravity equation both in cross‐section and panel data. We apply all these methods to a unique large database (124 countries from 1970 to 2006). It appears that if all these new developments can change the amplitude of the increase in the trade elasticity to distance, none solve the distance puzzle. We confirm the existence of this puzzle and identify that it only applies to low‐income countries which exhibit a significant rising distance effect on their trade of around 18% between 1970 and 2006 while the distance ‘puzzle' for trade within richer countries disappears.     

Maintaining Legitimacy: Controversies,Orders of Worth,and Public Justifications

We build on Boltanski and Thévenot's theory of justification to account for the ways in which different stakeholder groups actively engage with discourses and objects to maintain the legitimacy of institutions that are relevant to their activity. We use this framework to analyse a controversy emerging from a nuclear accident which involved a large European energy company and sparked public debate on the legitimacy of nuclear power. Based on the findings, we elaborate a process model of institutional repair that explains the role of agents and the structural constraints they face in attempting to maintain legitimacy. The model enhances institutional understandings of legitimacy maintenance in three main respects: it proposes a view of legitimacy maintenance as a controversy‐based process progressing through stakeholders' justifications vis‐à‐vis a public audience; it demonstrates the role of meta‐level ‘orders of worth’ as multiple modalities for agreement which shape stakeholders' public justifications during controversies; and it highlights the capacities that stakeholders deploy in developing robust justifications out of a plurality of forms of agreement.     

Truth and Robustness in Cross‐country Growth Regressions*

We re‐examine studies of cross‐country growth regressions by Levine and Renelt (American Economic Review, Vol. 82, 1992, pp. 942–963) and Sala‐i‐Martin (American Economic Review, Vol. 87, 1997a, pp. 178–183; Economics Department, Columbia, University, 1997b). In a realistic Monte Carlo experiment, their variants of Edward Leamer's extreme‐bounds analysis are compared with a cross‐sectional version of the general‐to‐specific search methodology associated with the LSE approach to econometrics. Levine and Renelt's method has low size and low power, while Sala‐i‐Martin's method has high size and high power. The general‐to‐specific methodology is shown to have a near nominal size and high power. Sala‐i‐Martin's method and the general‐to‐specific method are then applied to the actual data from Sala‐i‐Martin's original study.     

Learning,forecasting and structural breaks

We provide a general methodology for forecasting in the presence of structural breaks induced by unpredictable changes to model parameters. Bayesian methods of learning and model comparison are used to derive a predictive density that takes into account the possibility that a break will occur before the next observation. Estimates for the posterior distribution of the most recent break are generated as a by‐product of our procedure. We discuss the importance of using priors that accurately reflect the econometrician's opinions as to what constitutes a plausible forecast. Several applications to macroeconomic time‐series data demonstrate the usefulness of our procedure. Copyright © 2008 John Wiley & Sons, Ltd.     

GMM with Multiple Missing Variables

We consider efficient estimation in moment conditions models with non‐monotonically missing‐at‐random (MAR) variables. A version of MAR point‐identifies the parameters of interest and gives a closed‐form efficient influence function that can be used directly to obtain efficient semi‐parametric generalized method of moments (GMM) estimators under standard regularity conditions. A small‐scale Monte Carlo experiment with MAR instrumental variables demonstrates that the asymptotic superiority of these estimators over the standard methods carries over to finite samples. An illustrative empirical study of the relationship between a child's years of schooling and number of siblings indicates that these GMM estimators can generate results with substantive differences from standard methods. Copyright © 2015 John Wiley & Sons, Ltd.     

After the "Bubble": Valuation of Telecommunications Companies by Financial Analysts

In this article, we present the results of a series of interviews given by financial analysts specializing in the European telecommunications industry. Our objective is to gain an insight into their approaches to analysis and valuation (information sources, valuation methods, determinants of recommendations, etc.). We also consider whether analysts' approaches have changed since the “high‐tech bubble”. We find that today they rely much more on the discounted cash flow analysis method than at the end of the 1990s, when valuation was largely based on multiples. In line with this, analysts have changed their focus from revenue‐oriented measures towards an assessment of profitability and cash flow generation. Further, analysts claim to have become more diligent and more critical in their analysis.     

Creating a company‐wide,on‐line,performance management system: A case study at TRW Inc.

When new company leadership took the helm in 2001, TRW sought to create systems that supported what was, in essence, a cultural revolution—a new culture driven by six company‐wide “Behaviors.” Impeding this revolution, however, were the countless systems and methods for evaluating and managing the development of TRW's nearly 100,000 employees. The senior Management Committee challenged TRW's human resources function to create a common, on‐line, company‐wide system that supports performance appraisal, professional development, and succession management. A cross‐disciplinary and cross‐business team led by the Director of Leadership Development created a uniform Web‐based system in four short months. This system is now in place company‐wide in 36 countries on five continents. The approach we took and the success we have enjoyed can be replicated by other organizations seeking a uniform and effective way to evaluate and develop employees. © 2002 Wiley Periodicals, Inc.     

Winning at all costs: An exploration of bottom‐line mentality,Machiavellianism, and organisational citizenship behaviour

This study seeks to advance the bottom‐line mentality literature by exploring an antecedent and outcome of employee bottom‐line mentality. We build and test a moderated‐mediation model by arguing that the personality trait of Machiavellianism promotes an employee's adoption of a bottom‐line mentality. Moreover, drawing on trait activation theory, we argue that this relationship is fully activated when the employee perceives that the organisation endorses a bottom‐line mentality. To expand our theoretical model, we also suggest that employee bottom‐line mentality inhibits organisational citizenship behaviour directed towards co‐workers. Lastly, we investigate whether an employee's perception of an organisation's bottom‐line mentality conditionally moderates the indirect effect of Machiavellianism on organisational citizenship behaviour directed towards co‐workers through the mediated mechanism of employee bottom‐line mentality. Our theoretical model is tested across two distinct studies. Study 1, a field study conducted within a variety of organisations, provides evidence for our initial predictions (Hypotheses 1 and 2). Study 2, a multisource field study conducted in multiple industries, replicates and extends the findings from Study 1 by providing evidence for the entire moderated‐mediation model. We find support for our hypothesised model across both studies. Implications for theory and practice are discussed, and suggestions for future research are identified.     

CEO Succession Mechanisms,Organizational Context,and Performance: A Socio‐Emotional Wealth Perspective on Family‐Controlled Firms

This article extends the literature on CEO succession and financial performance by addressing corporate owners' mixed motives and desires to protect their interest in being in business. We draw on a Socio‐Emotional Wealth (SEW) perspective to investigate how the choice of one of three succession mechanisms – relay succession, ‘horse races’ among internal CEO candidates, and hiring from outside – may effectively balance trade‐offs between corporate owners' non‐financial SEW motives and the firm's financial performance. We find that implementing one of these succession mechanisms reduces the negative impact that typically characterizes CEO transitions in family firms. We also show that family presence on the board of directors offsets the benefits of having selected these balancing succession mechanisms, in either placing too much emphasis on SEW, or creating negative dynamics that make the chosen succession mechanisms less effective.     

ASSESSING THE REGIONAL ECONOMIC IMPACTS OF DEFENSE ACTIVITIES: A SURVEY OF METHODS

Defense activities exercised in a specific region may alter the region's economic performance. An accurate assessment of the potential economic impacts of defense activities is a valuable undertaking to enable regional planners to prepare for changes. The variety in the methods (among others, input–output models, economic base models, Keynesian regional multipliers, fixed‐effects estimators, and case‐study approaches) inspired by geography, sociology, and political science can pose a dilemma. We detail the historical and theoretical background of each method, as well as select exemplary cases where these methods were applied. By examining old and “new” methods, we aim to construct a typology that could be valuable to all stakeholders. In this sense, defense economics can also contribute to the allied social sciences by outlining evaluation methods that may be applicable to other fields.