DO PEERS AFFECT STUDENT ACHIEVEMENT? EVIDENCE FROM CANADA USING GROUP SIZE VARIATION

We provide the first empirical application of a new approach proposed by Lee (Journal of Econometrics 2007; 140 (2), 333–374) to estimate peer effects in a linear‐in‐means model when individuals interact in groups. Assumingsufficient group size variation, this approach allows to control for correlated effects at the group level and to solve the simultaneity (reflection) problem. We clarify the intuition behind identification of peer effects in the model. We investigate peer effects in student achievement in French, Science, Mathematics and History in secondary schools in the Province of Québec (Canada). We estimate the model using conditional maximum likelihood and instrumental variables methods. We find some evidence of peer effects. The endogenous peer effect is large and significant in Mathematics but imprecisely estimated in the other subjects. Some contextual peer effects are also significant. In particular, for most subjects, the average age of peers has a negative effect on own test score. Using calibrated Monte Carlo simulations, we find that high dispersion in group sizes helps with potential issues of weak identification. Copyright © 2012 John Wiley & Sons, Ltd.     

Consumer Response to Product Form in Technology‐Based Industries

Product design is a key driver of competitive advantage and new product success. Relative to its importance, product design remains an underresearched area. The authors address this issue by examining the moderating effects of consumer innovativeness and design acumen on consumer response to product form—i.e., the product's visual appearance. Using subjects from the United Kingdom, these effects were tested with a technology‐based product that is expected to be introduced to market in the near future. A technological innovation was chosen because such products are often characterized by an accelerating pace of innovation and shortening life cycles. In such contexts, the product's visual appearance is often critical to success because it drives inferences about the technical capabilities and functional novelty. Our findings indicate that for more innovative consumers, an innovative product form can further enhance perceived value, product liking, and purchase intention. Furthermore, for consumers who possess more design acumen, an innovative product form can increase perceived value and product liking. An innovative product form was not found to enhance purchase intention for consumers with higher levels of design acumen. A primary implication of the study is to consider target market characteristics such as consumer innovativeness and design acumen when selecting a product form strategy. Additional implications include involving consumer innovators in the development and evaluation of product forms and involving consumers with greater design acumen early in the product's introduction so that they may influence other buyers.     

Patent law and complementary innovations

This paper explores which patent policy should be applied to complementary innovations that are aggregated into broader technologies. I compare a setting in which complementary innovations must be bundled prior to patenting, with a second setting in which they can be patented separately. The first setting can improve static efficiency by avoiding the costs resulting from the scattering of complementary patents. But it also limits the disclosure of small innovations, which may lead to inefficient R&D cost duplications. A model capturing these effects shows that patenting complementary innovations separately is not efficient when innovations can be developed rapidly. This result justifies the enforcement of a severe “inventive step” or “non-obviousness” requirement in sectors where complementary innovations are frequent.     

Enhancing bank performance through branches or representative offices? Evidence from European banks

We investigate the impact of geographic integration and the level of multinationality by expansion as a foreign branch or representative office on the parent bank performance of 45 European banks during 2000–2007. We use breadth and depth to proxy for the level of multinationality in measuring a parent bank performance. We find that for foreign expansion as a branch, both dimensions (breadth and depth) have a positive impact on a bank's return on assets (ROA). For return on equity (ROE) and Tobin's Q, only depth is positively associated with a bank's ROE while breadth is positively correlated with a bank's Tobin's Q. However, the impact from expansion as a representative office is different; breadth and depth only have a positive impact on bank ROA performance in one of the six models. In terms of cost control, a representative office strategy is better able to control costs than a branching strategy. The model goodness of fit statistics suggest that variables associated with branching better explain the performance variables than similar variables associated with representative offices in terms of profitability. The results are opposite for net interest margin and cost ratio. Overall, our findings suggest that a branching strategy is a more effective strategy in enhancing a bank's profitability while a representative office strategy controls costs better.     

Efficiency,productivity and technology comparison for farms in Central and Western Europe: The case of field crop and dairy farming in Hungary and France

This paper investigates the differences in technical efficiency and productivity change, and the technology gaps, between French and Hungarian farms in the dairy and cereal, oilseed and protein crops (COP) sectors during the period 2001–2007. The analyses were performed with national Farm Accountancy Data Network (FADN) data and the Data Envelopment Analysis (DEA) approach under each country's respective frontier and under a metafrontier.Results reveal that French COP farms were on average more efficient under their own technology than Hungarian farms under theirs, but there was no difference between the two countries for dairy farms. However, metatechnology ratios calculated with the construction of the metafrontier indicate that Hungarian technology was the more productive in both the dairy and the COP sectors, but more noticeably in COP production.     

Job Protection: The Macho Hypothesis

This paper shows that the stringency of employment protectionin Mediterranean countries can be partly explained by culturalvalues embedded in religion. Both the security provided by thislegislation and its redistributive effects in favour of themale breadwinner insiders fit into the framework of Mediterraneanreligions. First, international individual surveys allow usto document that Catholics and Muslims are more likely to agreewith traditional gender division of work than Protestants andthe non-religious. Second, we develop a political economy modelpredicting that employment protection should be more stringentin countries where there is a larger share of insiders supportiveof traditional family values. We then show that this predictionis supported by empirical evidence on OECD countries over theperiod 1970–99. Footnotes ¹ E-mail addresses: yann.algan{at}ens.fr; cahuc{at}ensae.fr     

Identification of peer effects through social networks

We provide new results regarding the identification of peer effects. We consider an extended version of the linear-in-means model where interactions are structured through a social network. We assume that correlated unobservables are either absent, or treated as network fixed effects. We provide easy-to-check necessary and sufficient conditions for identification. We show that endogenous and exogenous effects are generally identified under network interaction, although identification may fail for some particular structures. We use data from the Add Health survey to provide an empirical application of our results on the consumption of recreational services (e.g., participation in artistic, sports and social activities) by secondary school students. Monte Carlo simulations calibrated on this application provide an analysis of the effects of some crucial characteristics of a network (i.e., density, intransitivity) on the estimates of peer effects. Our approach generalizes a number of previous results due to Manski [Manski, C., 1993. Identification of endogenous social effects: The reflection problem. Review of Economic Studies 60 (3), 531–542], Moffitt [Moffitt, R., 2001. Policy interventions low-level equilibria, and social interactions. In: Durlauf, Steven, Young, Peyton (Eds.), Social Dynamics. MIT Press] and Lee [Lee, L.F., 2007. Identification and estimation of econometric models with group interactions, contextual factors and fixed effects. Journal of Econometrics 140 (2), 333–374].     

Estimating Bird Damage to Rice in Africa: Evidence from the Senegal River Valley

Granivorous birds, mainly the Red‐billed Quelea, have subsisted on cereal crops in Africa for centuries and have caused substantial damage. There is, however, limited recent evidence on their impact. We propose an indirect method to estimate bird‐inflicted crop losses by fitting a production function with a damage abatement component and pest intensity slope dummies on a panel database of rice farmers in the Senegal River Valley. This allows us to estimate both bird damage and marginal productivity of bird control at different levels of bird pressure. Annual bird damage is found to average around 13.2% of the potential rice production during the wet seasons of 2003–2007, which translates into an average annual economic loss of 4.7 billion FCFA (€7.1 million). Our results are consistent with farmers’ perceived bird‐inflicted crop losses, averaging 15.2%. More alarmingly, we observe declining marginal productivities of bird control under increasing bird pressure. Farmers indicate that at high bird pressure, the efficacy of traditional bird scaring methods is inadequate, which suggests that predictive (monitoring), preventive (population control) and protective (insurance) measures against massive invasions are more urgent than improving the average efficacy of curative measures (pest control). These findings are especially relevant to farmers and policy‐makers who are currently struggling to implement an ambitious food self‐sufficiency programme in Senegal.