Using large data sets to forecast sectoral employment

We use several models using classical and Bayesian methods to forecast employment for eight sectors of the US economy. In addition to using standard vector-autoregressive and Bayesian vector autoregressive models, we also augment these models to include the information content of 143 additional monthly series in some models. Several approaches exist for incorporating information from a large number of series. We consider two multivariate approaches—extracting common factors (principal components) and Bayesian shrinkage. After extracting the common factors, we use Bayesian factor-augmented vector autoregressive and vector error-correction models, as well as Bayesian shrinkage in a large-scale Bayesian vector autoregressive models. For an in-sample period of January 1972 to December 1989 and an out-of-sample period of January 1990 to March 2010, we compare the forecast performance of the alternative models. More specifically, we perform ex-post and ex-ante out-of-sample forecasts from January 1990 through March 2009 and from April 2009 through March 2010, respectively. We find that factor augmented models, especially error-correction versions, generally prove the best in out-of-sample forecast performance, implying that in addition to macroeconomic variables, incorporating long-run relationships along with short-run dynamics play an important role in forecasting employment. Forecast combination models, however, based on the simple average forecasts of the various models used, outperform the best performing individual models for six of the eight sectoral employment series.     

Revealed versus hidden attributes as determinants of percieved product quality

Consumers' quality perception being interpreted as an overall product evaluation process, attribute importance is introduced as a mediating variable between the quality judgment and informational value of cues. Furthermore, all product attribute being classified into two different categories, revealed vs. hidden attributes, it is hypothesized that extrinsic cues can influence consumers' product evaluation only on the hidden quality attributes but not on the revealed quality attributes.     

The impossibility of a Paretian egalitarian

In a one-good world, there is a nice correspondence between the Pigou-Dalton principle of transfer and social welfare dominance. In this paper we study the case of multiple goods (without using prices as a means to come back to one dimension), and show that many results of the one-dimensional setting carry over to the multidimensional case when individuals are assumed to have identical preferences. But the nice correspondence breaks down as soon as individual preferences display minimal differences, and multidimensional versions of the transfer principle clash with the Pareto principle. This analysis reveals an interesting connection with the theory of fair allocation, since multidimensional transfer principles are closely related to the no-domination criterion, a weak version of the no-envy criterion.For helpful comments, we thank J. L. Castillo, M. Le Breton, Y. Sprumont, K. Suzumura and participants at a workshop in Osnabrück, a LivinTax conference in Bordeaux and a seminar in Hitotsubashi University, as well as two referees. Financial support from TMR project Living Standards, Inequality and Taxation Contract no ERBFMXCT 980248 of the European Commission is gratefully acknowledged. We thank Michel Le Breton for giving us the permission to state a result contained in his unpublished Ph D thesis.     

Dialogues or polemics: Social science expertise and welfare reform in Quebec

The development of social assistance and poverty reduction policies has been informed by social scientific knowledge. Social scientists, however, are not of one mind on such matters. They tend to be divided along disciplinary and ideological lines and may even foster political divisions and conflicts. This article draws on the author's experience as an academic policy adviser to the Quebec government to analyse from up close the institutional context that facilitates knowledge utilisation in the policy process. Two reform processes are considered: the first one, between 1995 and 1998, was less collaborative and led to divisions, and the second, between 1997 and 2009, involved more interactions with the civil service and proved more fruitful. In both cases, experts were divided, as were politicians and civil servants, but their capacity to reach a consensus was fostered, in the second case, by better support and collaboration from the government.     

Quality of life in workplace trauma victims seeking treatment for posttraumatic stress disorder

Traumatic events at work can have debilitating effects on employees. This pilot study aims to describe the trauma exposure, posttraumatic stress disorder (PTSD) severity, functioning level, and general and work-related quality of life of employees who experienced a workplace trauma and consequently developed PTSD. Forty-four participants with current PTSD were recruited and assessed using semistructured interviews and questionnaires. ANOVAs were performed to assess differences in outcomes between employees from different work settings. Specific types of traumatic events appear to occur in particular types of occupations. Participants manifested severe PTSD, low levels of current functioning, and poor general and work-related quality of life. Overall, these results did not significantly differ between employees in different occupations. Unemployed participants showed poorer outcomes than those who were still working despite their current difficulties. PTSD severity and the presence of comorbid major depression significantly predicted several quality-of-life outcomes. In conclusion, PTSD stemming from workplace trauma appears to have major consequences for employees. Clinical implications are discussed.     

Invariant tests based on M-estimators,estimating functions,and the generalized method of moments

We study the invariance properties of various test criteria which have been proposed for hypothesis testing in the context of incompletely specified models, such as models which are formulated in terms of estimating functions (Godambe, 1960) or moment conditions and are estimated by generalized method of moments (GMM) procedures (Hansen, 1982), and models estimated by pseudo-likelihood (Gouriéroux, Monfort, and Trognon, 1984b,c) and M-estimation methods. The invariance properties considered include invariance to (possibly nonlinear) hypothesis reformulations and reparameterizations. The test statistics examined include Wald-type, LR-type, LM-type, score-type, and C(α)?type criteria. Extending the approach used in Dagenais and Dufour (1991), we show first that all these test statistics except the Wald-type ones are invariant to equivalent hypothesis reformulations (under usual regularity conditions), but all five of them are not generally invariant to model reparameterizations, including measurement unit changes in nonlinear models. In other words, testing two equivalent hypotheses in the context of equivalent models may lead to completely different inferences. For example, this may occur after an apparently innocuous rescaling of some model variables. Then, in view of avoiding such undesirable properties, we study restrictions that can be imposed on the objective functions used for pseudo-likelihood (or M-estimation) as well as the structure of the test criteria used with estimating functions and generalized method of moments (GMM) procedures to obtain invariant tests. In particular, we show that using linear exponential pseudo-likelihood functions allows one to obtain invariant score-type and C(α)?type test criteria, while in the context of estimating function (or GMM) procedures it is possible to modify a LR-type statistic proposed by Newey and West (1987) to obtain a test statistic that is invariant to general reparameterizations. The invariance associated with linear exponential pseudo-likelihood functions is interpreted as a strong argument for using such pseudo-likelihood functions in empirical work.     

The Development of a “Neighborhood in Solidarity” in Switzerland

ABSTRACT

This article presents a case study based on the “Neighborhood in Solidarity” (NS) methodology to illustrate its application in a locality of 8,000 inhabitants in Switzerland. This specific project is proposed to exemplify the global aim of the NS methodology. That aim is to increase the integration of elderly persons in societies in order to improve their quality of life. The case study demonstrates the enhancement of the capacity of the older people to remain actively engaged in their neighborhood. The article focuses on the creation of an autonomous community of empowered older people who can resolve their own problems after a 5-year project. The construction of the local community is presented throughout the six steps of the methodology: (1) preliminary analysis, (2) diagnostic, (3) construction, (4) project design, (5) project implementation, and (6) empowerment and with three degrees of involvement (community, participative, and integrative involvement). Performance and output indicators, quality indicators, and social determinants of health assess the development of the local project. The impacts of the projects which are illustrated in this specific example motivated this publication to inspire practitioners from other countries.     

Regional Integration,Multinational Enterprise Strategy and the Impact of Country‐level Risk: The Case of the EMU

The European Monetary Union (EMU) provides a new macro‐level, institutional setting for multinational enterprises (MNEs). The authors investigate the impact of regional integration on MNE strategy by analysing Belgian firms’ entry‐mode choices in foreign markets, both EMU and non‐EMU ones, with a focus on what impact remains of country‐level risk. They demonstrate that regional integration has altered the impact of country‐level institutional risk on MNE entry‐mode choices inside the EMU. The conventional predictions of international business theory have been reversed, with higher country‐level risk inside the EMU driving a preference for wholly owned subsidiaries. Within the integrated region, insider firms now view higher country‐level risk as the equivalent of higher, micro‐level contracting risk. Such risk can best be mitigated through full internalization, combined with arm's length contracts, rather than through equity joint ventures.     

An automatic robust Bayesian approach to principal component regression

Principal component regression uses principal components (PCs) as regressors. It is particularly useful in prediction settings with high-dimensional covariates. The existing literature treating of Bayesian approaches is relatively sparse. We introduce a Bayesian approach that is robust to outliers in both the dependent variable and the covariates. Outliers can be thought of as observations that are not in line with the general trend. The proposed approach automatically penalises these observations so that their impact on the posterior gradually vanishes as they move further and further away from the general trend, corresponding to a concept in Bayesian statistics called whole robustness. The predictions produced are thus consistent with the bulk of the data. The approach also exploits the geometry of PCs to efficiently identify those that are significant. Individual predictions obtained from the resulting models are consolidated according to model-averaging mechanisms to account for model uncertainty. The approach is evaluated on real data and compared to its nonrobust Bayesian counterpart, the traditional frequentist approach and a commonly employed robust frequentist method. Detailed guidelines to automate the entire statistical procedure are provided. All required code is made available, see ArXiv:1711.06341.