Fixed Effects Panel Data Model Research Articles

Does More Sleep Time Improve Memory? Evidence for the Middle-Aged and Elderly

ABSTRACTBackground: The world population is aging rapidly. However, no study exists that examines specifically the effect of sleep time on memory among the middle-aged and elderly. Purpose: This paper examines the effect of sleep time on memory for the middle-aged and elderly. Methods: Data from the China Health and Retirement Longitudinal Study (CHARLS) were analyzed using fixed-effects models for panel data. The final sample used for this study included 4,330 middle-aged and elderly adults, of which about 50.4% were male. Results: The effect of sleep time on memory is heterogeneous across gender. One more hour of sleep time per night was estimated to increase the probability of “good memory” by roughly 0.2% (p > .1) for men and 1.6% (p < .01) for women. The odds ratios of “good memory” for men and women were estimated to be around 1.05 (p > .1) and 1.6 (p < .01), respectively. Discussion: This study suggests that efforts aimed at improving sleep time can bring significant memory-related benefit to middle-aged and elderly women. Translation to Health Education Practice: Health care providers and health educators should play a role in raising middle-aged and elderly women’s general awareness of the memory-related benefit of sleep.

MCMC Algorithm for Bayesian Heterogeneous Coefficients of Panel Data Model

Panel data models have been applied widely in many subject areas related to economic, social, and epidemiology. In some cases (e.g. epidemiology studies), the phenomena encountered have a complex relationship structured. The risk factors such as house index, healthy behaviour index, rainfall and the other risk factors of particular infectiouse disease may have different effect on the outcome due to the heterogeneity of crossection units. The effect of the covariates on outcome could vary over individual and time units. This condition is called as a non-stationary or instability relationship problem. This problem leads to bias and inefficient of the estimators. It is important to examine the heterogeneous coefficients model for avoiding inefficient estimator. We present in detail a statistical estimation procedure of the heterogeneous coefficients for fixed effect panel data model by means of the hierarchical Bayesian estimation approach. The challenges of the Bayesian approaches are finding the joint posterior distribution and developing the algorithm for estimating the parameters of interest. We find that the joint posterior distribution of the heterogeneous coefficients fixed effect panel data model does not follow any standard known distribution form. Consequently, the analytical solution cannot be applied and simulation approach of Markov Chain Monte Carlo (MCMC) was used. We present the MCMC procedure covering the derivation of the full conditional distribution of the parameters model and present step-by-step the Gibbs sampling algorithm. The idea of this preliminary research can be applied in various fields to overcome the non-stationarity problem.

Exchange Rate Regimes and Foreign Direct Investment Flow in West African Monetary Zone (WAMZ)

This study examines the effect of exchange rate regimes on foreign direct investment (FDI) flow for West African Monetary Zone (WAMZ). The Arellano Panel Correction for Serial Correlation and Heteroskedaticity option of the Within Estimator for fixed-effect panel data model as well as the Dynamic Panel Data Instrumental Variable Approach by Anderson and Hsiao [(1981). Estimation of dynamic models with error components. Journal of the American Statistical Association, 76, 598–606] for the countries selected based on the data availability for the period 1980–2016 were used. The fixed exchange rate regime was found to hamper FDI flow in the zone, while intermediate policy had a significantly positive effect in facilitating FDI flow during periods of declining foreign reserves and narrowing current account balance in WAMZ. This implies that the transmission of the effect of exchange rate regimes on FDI inflows depends on the positions of the foreign reserves and current account balance in the zone. The study therefore recommends the need for monetary authorities to be cautious in managing their exchange rates especially in periods of depleting foreign reserves and narrowing current account so as not to deter the much needed FDI inflow.

Agricultural trade liberalization, regional trade agreements and agricultural technical efficiency in Africa

Despite increased agricultural trade liberalization, high productive inefficiency in agriculture has kept Africa as a net importer of agriculture products. Empirical studies have focused on the trade liberalization–productivity growth nexus and overlooked the efficiency linkage. Also the role of regional trade agreements (RTAs) and institutions in reducing inefficiency in agriculture have been sidelined. We use a stochastic frontier approach and single-stage maximum likelihood estimation of a true fixed-effects panel data model for our analysis. Using maize and rice data, we provide evidence that through technology transfer, agricultural trade statistically improves technical efficiency. Moreover, results suggest that RTAs provide favourable technical efficiency effects, which varies across products and membership. Furthermore, we document that while regulatory quality reduces technical inefficiency, control of corruption increases it. Our findings call for increased role of RTAs in promoting agricultural trade liberalization. This should be complemented by further strengthening of institutions involved in the agriculture value chain.

Limitations of Fixed-Effects Models for Panel Data

Although fixed-effects models for panel data are now widely recognized as powerful tools for longitudinal data analysis, the limitations of these models are not well known. We provide a critical discussion of 12 limitations, including a culture of omission, low statistical power, limited external validity, restricted time periods, measurement error, time invariance, undefined variables, unobserved heterogeneity, erroneous causal inferences, imprecise interpretations of coefficients, imprudent comparisons with cross-sectional models, and questionable contributions vis-à-vis previous work. Instead of discouraging the use of fixed-effects models, we encourage more critical applications of this rigorous and promising methodology. The most important deficiencies—Type II errors, biased coefficients and imprecise standard errors, misleading p values, misguided causal claims, and various theoretical concerns—should be weighed against the likely presence of unobserved heterogeneity in other regression models. Ultimately, we must do a better job of communicating the pitfalls of fixed-effects models to our colleagues and students.

Testing for heteroskedasticity in two-way fixed effects panel data models

ABSTRACTIn this paper, we propose a new method for testing heteroskedasticity in two-way fixed effects panel data models under two important scenarios where the cross-sectional dimension is large and the temporal dimension is either large or fixed. Specifically, we will develop test statistics for both cases under the conditional moment framework, and derive their asymptotic distributions under both the null and alternative hypotheses. The proposed tests are distribution free and can easily be implemented using the simple auxiliary regressions. Simulation studies and two real data analyses demonstrate that our proposed tests perform well in practice, and may have the potential for wide application in econometric models with panel data.

The effect of management response similarity on online hotel booking

PurposeThis paper aims to examine the influences of the number of hotel management responses and especially the textual similarity in hotel management responses to online reviews on hotel online booking.Design/methodology/approachThis study used the data from 437 hotels in New York City on Expedia. The data specifically include online reviews, management responses and real-time number of online hotel bookings, which were merged to create one dataset for this study. To calculate the management response similarity, three widely recognized text mining functions of calculating textual similarity were adopted in this model. Fixed-effect panel data model was then used to examine the influence of management response to consumer online reviews on online hotel booking volume.FindingsThe empirical results demonstrate that the number of management responses to consumer online reviews does not significantly affect hotel booking; compared to none or only one management response, or management responses with low similarity, management responses with high similarity can significantly reduce the hotel booking on Expedia.Practical implicationsThis study suggests that the similarity of management responses influences customers’ hotel booking, and hotel managers should avoid providing too similar management responses.Originality/valueFirst, this study, for the first time, proposes the concept of management response similarity and its measurement methods. Second, this study takes an initial attempt to empirically test the influence of response similarity on hotel booking by using secondary data online.

Testing for sphericity in a fixed effects panel data model with time-varying variances

This paper proposes a test for the null of sphericity in a fixed effects panel data model with time-varying variances. We construct new test statistics using the within residuals from the fixed effects panel data regression model on the basis of Li and Yao’s (2018) test procedure. We show that the newly proposed test converges to a standard normal distribution as (n,T)→∞ with n∕T→c∈(0,∞). The power properties of the test are studied under both weak and strong factor model alternatives. Monte Carlo simulations are conducted to examine the finite sample performance.

Inter-City Spillover and Intra-City Agglomeration Effects Among Local Labour Markets in China

We examine how city size affect wage levels of cities (agglomeration externality) and how it influence surrounding cities (spill-over effect) in China for the period between 1995 and 2009. Using spatial fixed-effect panel data models and allowing for endogenous and exogenous spatial dependence, we find strong positive city size effect on real wage levels, which confirms the existence of agglomeration economy within cities. We also find significant differences in both the direct and indirect effect of factors such as FDI between more and less population dense areas.

Modelling the dynamic effects of elective hospital admissions on emergency levels in England

In England as elsewhere, policy makers are trying to reduce the pressure on costs due to rising hospital admissions by encouraging GPs to refer fewer patients to hospital specialists. This could have an impact on elective treatment levels, particularly procedures for conditions which are not life-threatening and can be delayed or perhaps withheld entirely. This study attempts to determine whether cost savings in one area of publicly funded health care may lead to the increases in cost in another and therefore have unintended consequences by offsetting the cost-saving benefits anticipated by policy makers. Using administrative data from Hospital Episode Statistics in England, we estimate dynamic fixed effects panel data models for emergency admissions at Primary Care Trust and Hospital Trust levels for the years 2004–2013, controlling for a group of area-specific characteristics and other secondary care variables. We find a negative link between current levels of elective care and future levels of emergency treatment. This observation comes from a time of growing admissions, and there is no guarantee that the link between emergency and elective activity will persist if policy is effective in reducing levels of elective treatment, but our results suggest that the cost-saving benefits to the NHS from reducing elective treatment are reduced by between 5.6 and 15.5% in aggregate as a consequence of increased emergency activity.

Mais recursos, melhores resultados? As relações entre custos escolares diretos e desempenho no Ensino Médio

Resumo Este artigo avalia as relações que os custos escolares diretos e a organização da oferta escolar têm com o desempenho de escolas públicas, aferido pelo Exame Nacional do Ensino Médio (Enem). O estudo se baseia nos determinantes do desempenho escolar a partir do enfoque teórico do chamado “efeito-escola”. Trata-se de pesquisa quantitativa, com uso de regressões múltiplas e quantílicas, com modelo de dados em painel, de efeitos fixos. A amostra foi composta por escolas brasileiras, analisadas entre 2012 e 2015. Os resultados indicam que há grande oscilação nos custos escolares diretos entre unidades de uma mesma rede de ensino, sugerindo desigualdade na distribuição dos recursos financeiros; que os custos escolares diretos, no entanto, têm baixa capacidade de explicação dos resultados das escolas no Enem; que mais recursos não se traduzem necessariamente em melhores resultados em termos de desempenho escolar, sugerindo que a forma como são mobilizados (de maneira planejada e com propósito claro) é que pode constituir um diferencial na aprendizagem. Adicionalmente, o estudo propõe uma metodologia para apurar custos escolares diretos.

The sunk-cost fallacy in the National Basketball Association: evidence using player salary and playing time

We analyze the effect of player salary, a sunk cost, on player utilization in the National Basketball Association (NBA). According to economic theory, rational agents make decisions based on marginal expected benefits and costs, and non-recoverable costs should not influence decision-making. Therefore, NBA teams should be playing their most productive players, regardless of salary. Whether decision-makers in the real world uphold this normative theory and ignore sunk costs has been the topic of much empirical work. Previous similar studies have looked at whether NBA teams irrationally escalate commitment to their highest drafted players by giving them more playing time than their performance warranted, coming to mixed conclusions. We build upon these studies by using salary to measure the impact of financial commitment on playing time, by using a fixed-effect panel data model to control for unobserved individual heterogeneity which may have been biasing previous results, and by using a spatial econometric model for a robust check of playing time dependence among players within each team. Our results indicate that a small but significant sunk-cost effect is found.

Asymmetric Fixed-effects Models for Panel Data

Standard fixed-effects methods presume that effects of variables are symmetric: The effect of increasing a variable is the same as the effect of decreasing that variable but in the opposite direction. This is implausible for many social phenomena. York and Light showed how to estimate asymmetric models by estimating first-difference regressions in which the difference scores for the predictors are decomposed into positive and negative changes. In this article, I show that there are several aspects of their method that need improvement. I also develop a data-generating model that justifies the first-difference method but can be applied in more general settings. In particular, it can be used to construct asymmetric logistic regression models.

Modelling the Dynamic Effects of Elective Hospital Admissions on Emergency Levels in England

In England as elsewhere, policy makers are trying to reduce the pressure on costs due to rising hospital admissions by encouraging GPs to refer fewer patients to hospital specialists. This could have an impact on elective treatment levels, particularly procedures for conditions which are not life-threatening and can be delayed or perhaps withheld entirely. This study attempts to determine whether cost savings in one area of publicly funded health care may lead to cost increases in another and therefore have unintended consequences by offsetting the cost-saving benefits anticipated by policy makers. Using administrative data from Hospital Episode Statistics (HES) in England we estimate dynamic fixed effects panel data models for emergency admissions at Primary Care Trust and Hospital Trust levels for the years 2004–13, controlling for a group of area-specific characteristics and other secondary care variables. We find a negative link between current levels of elective care and future levels of emergency treatment. This observation comes from a time of growing admissions and there is no guarantee that the link between emergency and elective activity will persist if policy is effective in reducing levels of elective treatment, but our results suggest that the cost-saving benefits to the NHS from reducing elective treatment are reduced by between 5.6 per cent and 15.5 per cent in aggregate as a consequence of increased emergency activity.

FDI, Institutional Change, Employment and Services Growth in Megalopolises

This study was set out to identify the linkages between FDI, institutional change, employment and services growth in megalopolises in China. We choose the four super cities in China, Beijing, Shanghai, Guangzhou and Shenzhen, take government interference and openness as the proxy variable of institutional change, based on Douglas production function and using data from Year 2006 to 2017, we investigated the relations between FDI, institutional change, employment, and services growth with fixed effect panel data model. Findings show that FDI presented a significant positive impact on the service economic growth of the four megalopolises, while the number of employees in the service industry has a negative effect on the growth of the service industry, which is contrary to the common sense; With respect to institutional change, openness presented a strong positive effect and effect of government intervention is not significant; the city’s fixed investment and R & D investment of service sectors also presented an unclear effect.

Inter-City Spillover and Intra-City Agglomeration Effects Among Local Labour Markets in China

We examine how city size affect wage levels of cities (agglomeration externality) and how it influence surrounding cities (spill-over effect) in China for the period between 1995 and 2009. Using spatial fixed-effect panel data models and allowing for endogenous and exogenous spatial dependence, we find strong positive city size effect on real wage levels, which confirms the existence of agglomeration economy within cities. We also find significant differences in both the direct and indirect effect of factors such as FDI between more and less population dense areas.

PENGARUH RESTRUKTURISASI MELALUI PEMBENTUKAN HOLDING BUMN TERHADAP KINERJA KEUANGAN BUMN

State-owned enterprises (SOEs) have additional duties to participate in accelerating development and supporting national economic growth in addition to being profit oriented companies. Various strategies to improve performance of the SOEs can be implemented, including restructuring through the establishment of SOEs holding. Several SOEs active in the same sectors were regrouped to become a holding company so that management is expected to become more optimal. In Indonesia until 2016, four SOEs, i.e. PT Semen Indonesia (Persero) Tbk., PT Pupuk Indonesia (Persero), Perum Perhutani and PT Perkebunan Nusantara III (Persero) have been established as holding companies. It is expected that the holdings will improve their financial performance. This article aims at evaluating whether the financial improvements happened by employing fixed effect panel data model. The results show that holding affect financial performances in terms of profitability, leverage, and liquidity. Profitability deteriorated after holding, while leverage and liquidity showed mixed results.

Disclosure of CSR Performance and Firm Value: New Evidence from South Africa on the Basis of the GRI Guidelines for Sustainability Disclosure

Prior CSR and firm performance research has produced mixed results. Even so, numerous researches examining this relationship from the perspective of international standardisation have primarily concentrated on developed economics. This leaves an obvious gap within the extant literature with regards to evidence from sub-Saharan Africa. The aim of this study is to investigate the relationship between the extent of CSR disclosure performance and firm value, in an emerging institutional setting. Using hand collected data of South African listed companies, we apply the GRI G3.1 guidelines, as a measure of disclosure performance. Based on the panel data fixed effect model, we document a positive but insignificant relationship between CSR disclosure performance and firm value. Secondly, a negative and insignificant relationship was found between environmental disclosure performance and firm value. Lastly, we found a positive and statistically significant relationship between social disclosure performance and firm value. Overall, our findings suggest that CSR disclosure has a limited effect on firm value. Our findings hold for a set of robustness tests. Our findings suggest that the incorporation of sustainability disclosure, on the basis of GRI, is moderately high among the selected companies. Implications of our results suggest that CSR disclosure may not necessarily influence firm value, despite its numerous benefits. We contribute to this line of research from a multi-theoretical perspective.

Nonparametric estimation of the marginal effect in fixed-effect panel data models

This paper considers multivariate local linear least squares estimation of panel data models when fixed effects are present. One-step estimation of the local marginal effect is of prime interest. A within-group nonparametric estimator is developed, where the fixed effects are eliminated by subtracting individual-specific locally weighted time average, i.e., the local-within-transformation. It is shown that the local-within-transformation-based estimator satisfies the standard properties of the local linear estimator. In comparison, nonparametric estimators based on the conventional (global) within-transformation or first difference result in estimators which are biased, even in large samples. The new estimator is used to examine the nonlinear relationship between income and nitrogen-oxide level (i.e., the environmental Kuznets curve) based on US state-level panel data.

청년실업의 이력현상 분석(The Analysis of Hysteresis in Youth Unemployment)

Korean Abstract: 본 연구에서는 OECD 선진 21개국(우리나라 포함)의 연령층별 실업률 및 노 동시장 제도 및 정책 변수를 이용하여, 청년실업 이력현상(hysteresis)의 존재 가능성과 그 크기를 시계열 및 국가패널 자료로 분석하였다. 크기 추정에 있 어서는 병역의무 이행 등 우리나라 특수상황, 여성 경력단절 효과 등을 고려 하여, 분석대상을 20~29세의 남성 청년층으로 한정하였다. 또한, 노동시장 제 도 및 정책 변수로는 국가간 비교가 가능한 OECD자료의 8가지 변수를 감안 하였는데, 우리나라는 고용보호법제화 지수를 제외한 여타 제도 및 정책들은 낮은 수준이었다. 시계열자료의 단위근 분석결과, 우리나라를 제외한 대부분 국가에서 청 년실업률(15~24세)에 단위근이 존재하여 평균회귀 성향보다 前기 의존성 이 높았다. 우리나라는 15~29세, 20~29세 청년실업률에서 단위근이 존재 하는 것으로 나타나 이력현상이 존재할 수 있음을 확인할 수 있었다. 이력현상의 크기를 패널분석으로 추정한 결과, 직업훈련․취업지원 등 적 극적 노동정책지출에 미온적이거나 고용보호법제가 엄격한 국가일수록, 청년기(20~29세)에 높은 실업률을 경험한 세대가 이후 연령대에서도 다 른 세대에 비해 더 높은 실업률을 겪는 이력현상이 더 크게 나타나 선행연 구의 결과를 재차 확인할 수 있었다. 따라서, 청년실업의 이력효과 완화를 위해서는 직무 및 직업교육, 취업 지원 등 적극적 노동정책지출을 확대해 나가고, 고용보호법제內에 청년 고용을 제약하는 요소는 없는지 살펴보는 것이 바람직해 보인다. English Abstract: Initially entering into job market in a hard time with unfavorable market institutions has a persistent, negative effect on young workers’ subsequent job conditions. This paper analyzes these hysteresis in youth unemployment by using composite fixed-effect panel data model. Data sets on age-cohort unemployment rate and labor market institutions are constructed from OECD 21 advanced economies, including Korea, during the 1985-2017 periods, and readjusted to match with the peculiarity of Korea. In Korea with less-aggressive stance on active labor market policy spending, a male worker who experiences a 1 percentage point higher youth unemployment rate when he was 20-29 years old has a 0.146 percentage point higher unemployment rate at ages 30-34 years and 0.035 percentage points higher at ages 35-39 years. These figures are larger than those of most countries with more aggressive spending scheme. This finding points out that hysteresis in Korea labor market can be mitigated by expanding the active labor market policy spending more aggressively.