LOOKING AHEAD BY LOOKING BACK: SWIFT,EVEN FLOW IN THE HISTORY OF MANUFACTURING

Manufacturing history is too often neglected in operations management and its lessons lost. Its usefulness for testing theory is under-appreciated. This paper uses critical aspects of the history of manufacturing to provide support for the Theory of Swift, Even Flow as an explanation of productivity gain. The rise of Britain in the Industrial Revolution and the rapid overtaking of Britain by the United States and Germany are argued to be thoroughly consistent with Swift, Even Flow, thereby vindicating both theory and the usefulness of history.     

Electronics: The new revolution

Electronics has produced a succession of remarkable accomplishments within the lifetime of living men. Yet, new developments in the field are so vast and exciting that they may be viewed as the advent of an Electronic Revolution comparable to the Industrial Revolution.     

A GLOBAL VIEW OF CROSS‐BORDER MIGRATION

This paper evaluates the global welfare impact of observed levels of migration using a quantitative multi‐sector model of the world economy calibrated to aggregate and firm‐level data. Our framework features cross‐country labor productivity differences, international trade, remittances, and a heterogeneous workforce. We compare welfare under the observed levels of migration to a no‐migration counterfactual. In the long run, natives in countries that received a lot of migration—such as Canada or Australia—are better off due to greater product variety available in consumption and as intermediate inputs. In the short run, the impact of migration on average welfare in these countries is close to zero, while the skilled and unskilled natives tend to experience welfare changes of opposite signs. The remaining natives in countries with large emigration flows—such as Jamaica or El Salvador—are also better off due to migration, but for a different reason: remittances. The welfare impact of observed levels of migration is substantial, at about 5% to 10% for the main receiving countries and about 10% in countries with large incoming remittances.     

The Long‐term Impacts of the Cultural Revolution: A Micro‐Analysis

This paper provides a micro‐analysis of the long‐term impacts of a particular historical event: the Cultural Revolution in urban labor market of China. Using the life‐cycle models and synthetic cohort approach, I demonstrate that the Cultural Revolution produced a lasting negative effect on permanent income for the subjected birth cohorts and this effect was amplified from the middle 1990s to the early 2000s as the Chinese market economy increasingly evolved. Channels in the mechanism of the impact includes productivity determinants (educational attainment, work experience, and health), marriage, and personality. The conclusions are robust to a variety of controls for family background as well as contamination factors, examinations with various control groups, contemporaneous comparisons, and placebo tests.     

Public Policy toward Employee Benefits in the United States,Canada and Taiwan:Lessons for European Integration

Abstract. Most governments intervene in the labor market to promote the provision of certain merit goods such as retirement income and health insurance. As economic integration has progressed within the European Community, questions have arisen concerning the harmonization of such benefits. Using case studies from three non-EC countries—the US., Canada, and Taiwan—the authors show that benefit structures and decisions reflect institutions which are difficult to change and whose patterns do not seem to reflect a simple economic determinism. The U.S. and Canada, two similar countries with integrated product markets, have adopted very different health insurance policies, but similar pension policies. Taiwan, despite its different stage of development, has a Canadian-style health insurance system and is currently grappling with how to arrange its pensions. A key outcome of the benefit-decision process is whether entitlements are external to the firm or contingent on maintaining a specific job attachment. An important factor in modifying benefit arrangements is the degree of social concertation present in national political systems. Benefits systems are best designed or reformed when institutions permit discussion of macro pressures. EC countries, now considering harmonization of economic institutions, have the opportunity to modernize their benefit arrangements. A related paper was presented to the Ninth World Congress of the International Industrial Relations Associations and its associated Study Group on Economic Policy and Social Concertation, Sydney, Australia, August 30-September 4, 1992.     

Trust,Morality, and the Privatization of Water Services in Developing Countries

This article examines the business of water privatization and the ethics implied in the transformation of the water services sector in developing countries. Drawing on data derived from field visits and semi‐structured interviews held with members of government, nongovernmental organizations, and other stakeholders in one country undergoing transformation in this sector, Ghana, the article considers the ethical perspectives of the various involved stakeholders. The analysis draws on three perspectives—Gilligan's ethic of care, Rawls’ principles of justice, and virtue ethics—which together highlight the economic, class, and gender‐based dimensions of the privatization debate. Finding that endemic mistrust characterizes this debate, the article considers what is needed to re‐instill trust among stakeholders. Specific implications are provided for business leaders and government policymakers.     

CONSTITUENCIES OF JOURNALS IN PRODUCTION AND OPERATIONS MANAGEMENT: IMPLICATIONS ON REACH AND QUALITY*

I analyzed the contributions made by members of the following constituencies in terms of the number of articles published in the Journal of Operations Management (JOM), Manufacturing and Service Operations Management (M&SOM), and Production and Operations Management (POM): the top 20 U.S. business schools and the top 7 non‐U.S. business schools as ranked by Business Week or U.S. News and World Report, business and government organizations, U.S. business schools ranked between 21 and 50, non‐U.S. business schools not included above, and U.S. business schools not included above. I also analyzed the contributions made by U.S. business schools with top 10 programs in production and operations management; 9 of which are also in the list of top 20 U.S. business schools. Authors from the schools with top 10 programs in production and operations management contributed 20.2% of the articles published in POM and 3.5% of the articles published in JOM during 1997‐2001. They contributed 24.6% of the articles in the eight issues (from July 2000 through June 2002) of M&SOM. During these periods, authors from the top 27 schools contributed 29.3% of the articles published in POM, 9.4% of the articles published in JOM, and 37.4% of the articles to the eight issues of M&SOM. Also during the same periods, authors from business and government organizations contributed 6.6% of the articles published in POM, 1.9% of the articles published in JOM, and 5.8% of the articles published in the eight issues of M&SOM. The findings reported in this paper reflect the reach of the three journals and the perceptions of various constituencies regarding journal quality. The findings about POM and JOM have a very high degree of validity because both journals are more than 10 years old and have well‐established constituencies. The conclusions about the M&SOM constituencies are tentative because it is about 3 years old, and it is still developing its constituencies.     

Health Care Supply Chain Design: Toward Linking the Development and Delivery of Care Globally*

This article is motivated by the gap between the growing demand and available supply of high‐quality, cost‐effective, and timely health care, a problem faced not only by developing and underdeveloped countries but also by developed countries. The significance of this problem is heightened when the economy is in recession. In an attempt to address the problem, in this article, first, we conceptualize care as a bundle of goods, services, and experiences—including diet and exercise, drugs, devices, invasive procedures, new biologics, travel and lodging, and payment and reimbursement. We then adopt a macro, end‐to‐end, supply chain–centric view of the health care sector to link the development of care with the delivery of care. This macro, supply chain–centric view sheds light on the interdependencies between key industries from the upstream to the downstream of the health care supply chain. We propose a framework, the 3A‐framework, that is founded on three constructs—affordability, access, and awareness—to inform the design of supply chain for the health care sector. We present an illustrative example of the framework toward designing the supply chain for implantable device–based care for cardiovascular diseases in developing countries. Specifically, the framework provides a lens for identifying an integrated system of continuous improvement and innovation initiatives relevant to bridging the gap between the demand and supply for high‐quality, cost‐effective, and timely care. Finally, we delineate directions of future research that are anchored in and follow from the developments documented in the article.     

Improving the Milk Supply Chain in Developing Countries: Analysis,Insights, and Recommendations

Quality issues in milk—arising primarily from deliberate adulteration by producers—have been reported in several developing countries. In the milk supply chain, a station buys raw milk from a number of producers, mixes the milk and sells it to a firm (that then sells the processed milk to end consumers). We study a non‐cooperative game between a station and a population of producers. Apart from penalties on proven low‐quality producers, two types of incentives are analyzed: confessor rewards for low‐quality producers who confess and quality rewards for producers of high‐quality milk. Contrary to our expectations, whereas (small) confessor rewards can help increase both the quality of milk and the station's profit, quality rewards can be detrimental. We examine two structures based on the ordering of individual and mixed testing of milk: pre‐mixed individual testing (first test a fraction of producers individually and then [possibly] perform a mixed test on the remaining producers) and post‐mixed individual testing (first test the mixed milk from all producers and then test a fraction of producers individually). Whereas pre‐mixed individual testing can be socially harmful, a combination of post‐mixed individual testing and other incentives achieves a desirable outcome: all producers supply high‐quality milk with only one mixed test and no further testing by the station.     

Age,Cohort, and the Slump in Job Satisfaction among West German Workers

Abstract. Using German panel data, I examine the long‐term development in satisfaction with work from 1984 until 2001. As was the case for many other industrialized countries, Germany witnessed a sharp decline in workers’ self‐reported job satisfaction in the late 1980s and 1990s, the reason of which is yet unknown. I present a cohort analysis of job satisfaction using various identifying assumptions to examine several explanations for this phenomenon: pure cohort effects, a decrease in self‐reported job security, an increase in stress at work and a deterioration in other job conditions, and possible survey artefacts such as interviewer or repeated measurement effects. However, none of these can explain the overall decline in job satisfaction.     

Looks‐Based Hiring and Wrongful Discrimination

Popular clothing retailer Abercrombie and Fitch (A&F) is well‐known for hiring attractive store sales clerks. While the economic benefits of this hiring practice for the company are undeniable, many commentators contend that it constitutes wrongful discrimination against unattractive job seekers. In this article, I explore the ethics of A&F‐style lookism and challenge two common perspectives on this issue. I argue that on one hand, looks‐based hiring cannot be defended based on its economic benefits alone, as race‐based hiring also can be profitable in some circumstances. At the same time, I reject arguments that looks‐based hiring is not “job relevant” given its economic impact in many contexts. Through a comparison between race‐ and looks‐based hiring, I conclude that at least for businesses that are relevantly similar to A&F—firms for which lookism produces clear economic benefits—looks‐based hiring is permissible.     

Regression Versus Causation,Revisited

I recently discussed pitfalls in attempted causal inference based on reduced‐form regression models. I used as motivation a real‐world example from a paper by Dr. Sneeringer, which interpreted a reduced‐form regression analysis as implying the startling causal conclusion that “doubling of [livestock] production leads to a 7.4% increase in infant mortality.” This conclusion is based on: (A) fitting a reduced‐form regression model to aggregate (e.g., county‐level) data; and (B) (mis)interpreting a regression coefficient in this model as a causal coefficient, without performing any formal statistical tests for potential causation (such as conditional independence, Granger‐Sims, or path analysis tests). Dr. Sneeringer now adds comments that confirm and augment these deficiencies, while advocating methodological errors that, I believe, risk analysts should avoid if they want to reach logically sound, empirically valid, conclusions about cause and effect. She explains that, in addition to (A) and (B) above, she also performed other steps such as (C) manually selecting specific models and variables and (D) assuming (again, without testing) that hand‐picked surrogate variables are valid (e.g., that log‐transformed income is an adequate surrogate for poverty). In her view, these added steps imply that “critiques of A and B are not applicable” to her analysis and that therefore “a causal argument can be made” for “such a strong, robust correlation” as she believes her regression coefficient indicates. However, multiple wrongs do not create a right. Steps (C) and (D) exacerbate the problem of unjustified causal interpretation of regression coefficients, without rendering irrelevant the fact that (A) and (B) do not provide evidence of causality. This reply focuses on whether any statistical techniques can produce the silk purse of a valid causal inference from the sow's ear of a reduced‐form regression analysis of ecological data. We conclude that Dr. Sneeringer's analysis provides no valid indication that air pollution from livestock operations causes any increase in infant mortality rates. More generally, reduced‐form regression modeling of aggregate population data—no matter how it is augmented by fitting multiple models and hand‐selecting variables and transformations—is not adequate for valid causal inference about health effects caused by specific, but unmeasured, exposures.     

The Global Food Industry and “Creative Capitalism”: The Partners in Food Solutions Sustainable Business Model

Rising global food prices have driven 44 million additional people into extreme poverty—and malnutrition—in developing countries since June 2010. Partners in Food Solutions (PFS), a nonprofit social enterprise affiliated with General Mills, is proposed as the conduit for food industry managers, engineers, and scientists to initially advise small‐ and medium‐sized African mills and food processors—and later other developing countries—on improving supply chain management by addressing manufacturing problems, developing products, improving packaging, extending product shelf, and finding new product markets. In this article, the “creative capitalism” model of sustainability and social and environmental responsibility is applied to the food manufacturing industry's efforts supporting PFS. Furthermore, the evolution of the sustainable business model developed by PFS is thoroughly described, explained, and analyzed as a generic model of social enterprise to be “scaled up” by the global food manufacturing industry. A summary of salient points conclude the article.     

Distressed Selling by Farmers: Model,Analysis, and Use in Policy‐Making

Among the various governmental schemes that support agriculture, support prices have been adopted by many developing countries. A support price for an agricultural crop is a guaranteed price at which a governmental entity agrees to purchase that crop from farmers. Despite this surety, a surprising practice of “distressed” selling 1 1 A 1‐minute news clip on distressed selling is available at: https://www.youtube.com/watch?v=U2lr5rBTpaU
has been widely observed in practice: Farmers sell a significant portion of their crops to outside agents at prices much lower than the support price. We build a tractable stochastic dynamic programming model that captures the salient features of the ground realities—limited as well as uncertain procurement capacity, high holding costs for the farmers, and lack of affordable credit—that conspire to induce distressed selling and, consequently, a significant loss of welfare of the farmers. Using real data on procurement under a support‐price program, we establish the accuracy of our model's prediction on the volume of distressed sales. Finally, we show how our model and its solution can serve as a simple and useful tool for policy‐makers to assess the relative impact of the improvements in the main determinants of distressed sales.     

Long‐Term Debt and Optimal Policy in the Fiscal Theory of the Price Level

The fiscal theory says that the price level is determined by the ratio of nominal debt to the present value of real primary surpluses. I analyze long‐term debt and optimal policy in the fiscal theory. I find that the maturity structure of the debt matters. For example, it determines whether news of future deficits implies current inflation or future inflation. When long‐term debt is present, the government can trade current inflation for future inflation by debt operations; this tradeoff is not present if the government rolls over short‐term debt. The maturity structure of outstanding debt acts as a “budget constraint” determining which periods' price levels the government can affect by debt variation alone. In addition, debt policy—the expected pattern of future state‐contingent debt sales, repurchases and redemptions—matters crucially for the effects of a debt operation. I solve for optimal debt policies to minimize the variance of inflation. I find cases in which long‐term debt helps to stabilize inflation. I also find that the optimal policy produces time series that are similar to U.S. surplus and debt time series. To understand the data, I must assume that debt policy offsets the inflationary impact of cyclical surplus shocks, rather than causing price level disturbances by policy‐induced shocks. Shifting the objective from price level variance to inflation variance, the optimal policy produces much less volatile inflation at the cost of a unit root in the price level; this is consistent with the stabilization of U.S. inflation after the gold standard was abandoned.     

Reservation Wages: Explaining Some Puzzling Regional Patterns

We use the Italian Labour Force Survey and the European Household Panel Survey to analyse the distribution of the reservation wages reported by job‐seekers. In Italy, reservation wages appear to be higher in the South — the low‐income and high‐unemployment area of the country — than in the North and Centre. A similar, rather counterintuitive, pattern can also be found in Finland, France, and Spain. First, we show that the way in which these data are commonly collected generates double‐selection bias. Second, we show that this bias has a strong effect on the estimation of the geographical pattern of reservation wages in many countries. The size of this bias is substantial in Italy. When controlling for it, reservation wages are at least 10 per cent higher in the North and Centre than in the South.     

Skill Acquisition in the Informal Economy and Schooling Decisions: Evidence from Emerging Economies

Informal jobs offer skill acquisition opportunities that may facilitate a future switch to formal employment for young workers. In this sense, informal training on the job may be a viable alternative to formal schooling in an economy with a large and diverse informal sector. In this paper, I investigate if these considerations are relevant for the schooling decisions of young individuals using panel data for 17 Latin American countries and micro‐level data for Turkey. Specifically, I ask if the prevalence of informal jobs distorts schooling attainment. I concentrate on three measures of schooling outcomes: (1) secondary education enrollment rate; (2) out‐of‐school rate for lower secondary school; and (3) tertiary education graduation rate. I find that the secondary education enrollment rate is negatively correlated with the size of the informal economy, whereas the out‐of‐school rate is positively correlated. Moreover, the tertiary education graduation rates tend to fall as the informal employment opportunities increase. This means that informal training on the job may be crowding out school education in developing countries. Policies that can potentially affect the size of the informal sector should take into consideration these second‐round effects on aggregate schooling outcomes.     

Dedicated Transportation Subnetworks: Design,Analysis, and Insights

A dedicated subnetwork (DSN) refers to a subset of lanes, with associated loads, in a shipper's transportation network, for which resources—trucks, drivers, and other equipment—are exclusively assigned to accomplish shipping requirements. The resources assigned to a DSN are not shared with the rest of the shipper's network. Thus, a DSN is an autonomously operated subnetwork and, hence, can be subcontracted. We address a novel problem of extracting a DSN for outsourcing to one or more subcontractors, with the objective of maximizing the shipper's savings. In their pure form, the defining conditions of a DSN are often too restrictive to enable the extraction of a sizable subnetwork. We consider two notions—deadheading and lane‐sharing—that aid in improving the size of the DSN. We show that all the optimization problems involved are both strongly NP‐hard and APX‐hard, and demonstrate several polynomially solvable special cases arising from topological properties of the network and parametric relationships. Next, we develop a network‐flow‐based heuristic that provides near‐optimal solutions to practical instances in reasonable time. Finally, using a test bed based on data obtained from a national 3PL company, we demonstrate the substantial monetary impact of subcontracting a DSN and offer useful managerial insights.     

UNCERTAINTY,PERSISTENCE, AND HETEROGENEITY: A PANEL DATA PERSPECTIVE

The purpose of this paper is to review newly developed identification and estimation tools that are relevant for the analysis of dynamic dependence structures of income risk. I present an application to nonlinear permanent–transitory models of household income using data from the Panel Study of Income Dynamics (PSID), but the empirical approach is more generally applicable. Household income processes are of interest because the size of shocks, the nature of their persistence, and cross‐household heterogeneity are all important to understand how income inequality varies with age and cohort and how it translates into consumption inequality. I argue that going from an econometrics of autocovariances to an econometrics of flexible distributions is feasible and has the potential to reveal richer aspects of risk—for example, nonlinear persistence of unusual shocks.     

Societal Response to Hurricane Mitch and Intra‐ versus Intergenerational Equity Issues: Whose Norms Should Apply?

Late in the 1998 hurricane season, Central America was slammed by a devastating hurricane. Honduras, Nicaragua, El Salvador, Guatemala, and Belize were greatly impacted by Hurricane Mitch, one of the deadliest storms to affect the region in the past 200 years. The economies of each of these countries were badly affected. In the case of Honduras — at the time the fourth‐poorest country in Latin America — its president suggested that 50 years of progress had been wiped out by the floods and mudslides associated with this relatively short‐lived storm system. Humanitarian assistance poured into the region in the first months following the disaster. As of mid‐2000, various national, bilateral, international, and nongovernmental programs were in progress or on the drawing board for recovery, reconstruction, and renewed development of the worst affected countries. Using Honduras as a case study, some of the ethical issues that abound in the decisions of whom to help, when, and how to help them in the wake of such an extreme climate‐related human tragedy are examined. Should development assistance be focused on those who have been directly and adversely affected by this storm, or should the emphasis be on reducing the risk of exposure by future generations to such disasters? Is there yet another approach that seeks to protect future generations from similar harm while at the same time assisting present‐day victims to get through their hardships?