Statistical data integration using multilevel models to predict employee compensation

This article considers the case where two surveys collect data on a common variable, with one survey being much smaller than the other. The smaller survey collects data on an additional variable of interest, related to the common variable collected in the two surveys, and out-of-scope with respect to the larger survey. Estimation of the two related variables is of interest at domains defined at a granular level. We propose a multilevel model for integrating data from the two surveys, by reconciling survey estimates available for the common variable, accounting for the relationship between the two variables, and expanding estimation for the other variable, for all the domains of interest. The model is specified as a hierarchical Bayes model for domain-level survey data, and posterior distributions are constructed for the two variables of interest. A synthetic estimation approach is considered as an alternative to the hierarchical modelling approach. The methodology is applied to wage and benefits estimation using data from the National Compensation Survey and the Occupational Employment Statistics Survey, available from the Bureau of Labor Statistics, Department of Labor, United States.     

Inequality, Wealth and Health: Is Decreasing Income Inequality the Key to Create Healthier Societies?

The idea that the level of stratification of societies contributes to the well-being of their members is gaining popularity. We contribute to this debate by investigating whether reducing inequalities in the income distribution of societies is a strategy for improving population health, especially appropriate for those countries that have reached the limits of economic growth. We test this idea on a dataset covering 140 countries and 2360 country-year observation between 1987 and 2008 and formulate hypotheses separately for countries with different level of economic development. We indeed found that countries with higher levels of income inequality also have lower levels of life expectancy (our measure of population health), and this result was consistent both in cross-sectional and longitudinal analyses. However, the relationship was found only among low- and middle-developed countries. In the group of high-developed countries, the relationship between income inequality and life expectancy was non-significant, which contradicts the literature. Expectations on the relationship between a country’s wealth and health were confirmed: economic growth does contribute to improving population health, but this effect is weaker in more economically developed countries. These results imply that a decrease in a country’s income inequality parallel with an increase in its wealth can help to improve health in economically lesser-developed countries, but not in high-developed countries.     

A value‐driven approach to health care

Redefining Healthcare: Creating Value‐Based Competition on Results, by Michael E. Porter and Elizabeth O. Teisberg. Boston: Harvard Business School Press, 2006. 506 pp., $35.00 cloth.     

Investing in children’s education: are Muslim immigrants different?

Using a unique data set on immigrants living in France in 2003, we investigate whether Muslims invest differently in their children’s education compared to non-Muslims. In particular, we want to assess whether educational inequalities between the children of Muslim and non-Muslim immigrants stem from differences between or within families. After controlling for a broad set of individual and household characteristics, we find no difference in education between children of different religions. However, we do find more within-family inequality in children’s educational achievements among Muslims relative to non-Muslims. The within-family variance is 15 % higher among Muslims relative to Catholics and 45 % higher relative to immigrants with other religions, but the intra-family inequality remains difficult to explain. Overall, our results suggest that Muslim parents tend to redistribute their resources more unequally among their children.     

Do private and public transfers received affect life satisfaction? Evidence from Romania

This paper uses Romanian survey data to investigate the determinants of individual life and financial satisfaction, with an emphasis on the role of public and private transfers received. A possible concern is that these transfers are unlikely to be exogenous to satisfaction. We use recursive simultaneous equations models to account both for this potential problem and for the fact that public transfers are themselves endogenous in the private transfer equation. We find that public transfers received have a positive influence on both life and financial satisfaction, while private transfers do not matter. People receive private transfers irrespective of their economic and demographic characteristics in Romania, which could be explained by some social norm motives.     

Neglecting structural breaks when estimating and valuing dynamic correlations for asset allocation

This paper assesses the econometric and economic value consequences of neglecting structural breaks in dynamic correlation models and in the context of asset allocation framework. It is shown that changes in the parameters of the conditional correlation process can lead to biased estimates of persistence. Monte Carlo simulations reveal that short-run persistence is downward biased while long-run persistence is severely upward biased, leading to spurious high persistence of shocks to conditional correlation. An application to stock returns supports these results and concludes that neglecting such structural shifts could lead to misleading decisions on portfolio diversification, hedging, and risk management.