DURATION DEPENDENCE VERSUS UNOBSERVED HETEROGENEITY IN TREATMENT EFFECTS: SWEDISH LABOR MARKET TRAINING AND THE TRANSITION RATE TO EMPLOYMENT

The effect of a treatment on the hazard rate of a duration outcome may depend on the elapsed time since treatment. In addition, treatment effects may be heterogeneous across agents. The former gives rise to duration dependence of the treatment effect, whereas unobserved heterogeneity gives rise to spurious duration dependence of the observable hazard rate. We develop a model allowing for duration dependence and unobserved heterogeneity in the treatment effect. The model incorporates a Timing of Events model and allows for selectivity on unobservables. We prove identification, exploiting variation in the timing of treatment and outcome. In the application we analyze the effects of the Swedish vocational employment training program on the individual transition rate from unemployment to work. We demonstrate the appropriateness of the approach by studying the enrollment process. The data cover the population and include multiple unemployment spells for many individuals. The results indicate a large, significantly positive effect on exit to work shortly after exiting the program. The effect at the individual level diminishes after some weeks. When taking account of the time spent in the program, the effect on the mean unemployment duration is small. Copyright © 2012 John Wiley & Sons, Ltd.     

Knowledge,risk and Beck: Misconceptions of expertise and risk

Ulrich Beck's work is beginning to alter how risk is understood. This paper maps out the core of Beck's argument and provides a critique of his analysis. In particular it argues that this emerging concept of risk is flawed because it is not rooted in an ontological view of knowledge and, hence, it misunderstands the relationship between experts, expert knowledge and lay knowledge. Because of his downgrading of ontology, Beck under-theorizes the politics of expertise and the sociality of knowledge hence we should be cautious in our use of his analysis of risk and organization in late modernity.

It has been said civilization is a race between education and catastrophe. With Katrina, we have had the catastrophe, and we are racing inexorably toward the next. Americans want to know; what have we learned?

(US Select Bipartisan Committee, 2006; ix)

     

Board ownership and IPO returns

This study examines the role of the board of directors for IPO pricing irregularities. Theory suggests that initial underpricing may be the result of asymmetric information and the long-run underperformance may be the result of managerial mismanagement of new funds due to agency conflicts. A strong board of directors can potentially reduce both asymmetric information and agency problems. We find that the structure of the board is related to IPO pricing anomalies. Initial returns are directly related to share ownership by insiders and the percentage of independent outsiders, and long-run returns are directly related to share ownership by insiders.     

An empirical assessment of assortative matching in the labor market

In labor markets with worker and firm heterogeneity, the matching between firms and workers may be assortative, meaning that the most productive workers and firms team up. We investigate this with longitudinal population-wide matched employer–employee data from Portugal. Using panel data methods, we quantify a firm-specific productivity term for each firm, and we relate this to the skill distribution of workers in the firm. We find that there is positive assortative matching, in particular among long-lived firms. Using skill-specific estimates of an index of search frictions, we find that the results can only to a small extent be explained by heterogeneity of search frictions across worker skill groups.     

The gender difference in wages and the returns to schooling over the great recession in the U.S.

This paper examines the effects of the Great Recession on the gender difference in hourly wage and the rate of return to schooling in the United States. Using data from American Community Survey 2000–2015, we find that the male-female difference in hourly wage declined during and after the recession. The Great Recession decreased earnings for both men and women, especially for those with more education. We also find there is a significant gender difference in the effects of the Great Recession on the returns to schooling. The Great Recession increased the rate of return to schooling for both men and women, and the female-male difference in the returns to schooling decreased by 0.4 percentage points in the post-recession period. The change of the gender difference in the returns to schooling can be explained by the wage structure change for men and women over the recession.     

Cost-effectiveness analysis of the SAPIEN 3 TAVI valve compared with surgery in intermediate-risk patients

Objective: Transcatheter aortic valve implantation (TAVI) has become the therapy of choice for treating severe aortic stenosis in patients at high-risk for surgery or where it is considered too risky to attempt. This uptake varies across geographies however, and its cost or value has frequently been cited as the reason for this. We sought to evaluate the potential cost and clinical impact of TAVI in intermediate risk patients from a French collective perspective.

Materials and methods: The analysis was performed using a novel Markov model with data derived from the PARTNER II randomized controlled trial for survival, clinical event rates, and quality-of-life. The simulated time horizon was 15?years, costs were from French sources and presented in 2016 Euros. Discounting of all outcomes was at 4% annually and the effect of uncertainty in model parameters was explored by deterministic and probabilistic sensitivity analysis (PSA).

Results: In comparison to surgery, TAVI resulted in improved clinical outcomes (life expectancy and quality-adjusted life expectancy) and lower costs over a lifetime time horizon. The base case results showed increases of 0.42?years and 0.41 QALYs with lifetime cost savings of €439 for TAVI compared to surgery. PSA results showed a >50% likelihood of cost-effectiveness at €0 willingness-to-pay and a 100% likelihood at ～€15,000.

Limitations: Clinically, survival projections are based on limited follow-up data and introduce uncertainty into the outcomes from the model. Economically, procedure costs are derived from a heterogeneous mix of patient risk groups, although this is much more likely to bias against TAVI and under-estimate overall cost savings.

Conclusions: In our analyses of intermediate risk patients, TAVI is associated with superior clinical outcomes compared to surgery and is cost saving. It could be expected that cost savings are conservative and likely to increase over time.     

Conceptualizing the country of origin of brand

With the globalization of international trade, consumers today are faced with a proliferation of products with multicountry affiliations (hybrid products). As such it is likely that the country of origin of manufacture of a hybrid product is no longer the most important determinant in the evaluation of brand image and product quality. This paper therefore extends prior country of origin research by conceptualizing the country of origin of brand as an alternative evaluation tool. In particular, an earlier definition of country of origin is revisited for its emphasis on the country of brand. We have also highlighted the strategic, conceptual and practical relevance in the form of future research propositions. The managerial implications are also presented.     

The effect of search frictions on wages

We aim to test whether the degree of informational search frictions in the labor market has a negative effect on wages. In a range of equilibrium search models of the labor market, this effect is predicted to be negative. Nevertheless, this has never been tested. We perform tests with matched worker–firm data. The worker data are informative on individual wages and labor market transitions, and this allows for estimation of the degree of search frictions. The firm data are informative on labor productivity. This allows us to investigate how the mean difference between labor productivity and wages in a market depends on the degree of frictions and other determinants, and to assess the quantitative relevance of frictions for wages.     

Prospect theory and liquidation decisions

We solve a liquidation problem for an agent with preferences consistent with the prospect theory of Kahneman and Tversky [Econometrica 47 (1979) 263-291]. We find that the agent is willing to hold a risky project with a relatively inferior Sharpe ratio if the project is currently making losses, and intends to liquidate it when it breaks even. On the other hand, the agent may liquidate a project with a relatively superior Sharpe ratio if its current profits rise or drop to the break-even point. Our results capture the spirit of the disposition effect and the break-even effect documented in empirical and experimental studies.