Archive
Mandate-Based Health Reform and the Labor Market: Evidence from the Massachusetts Reform
Mandate-Based Health Reform and the Labor Market: Evidence from the Massachusetts Reform (PDF)
Source: National Bureau of Economic Research (via Wharton School)
We model the labor market impact of the three key provisions of the recent Massachusetts and national \mandate-based” health reforms: individual and employer mandates and expansions in publicly-subsidized coverage. Using our model, we characterize the compensating di erential for employer-sponsored health insurance (ESHI) | the causal change in wages associated with gaining ESHI. We also characterize the welfare impact of the labor market distortion induced by health reform. We show that the welfare impact depends on a small number of \sucient statistics” that can be recovered from labor market outcomes. Relying on the reform implemented in Massachusetts in 2006, we estimate the empirical analog of our model. We nd that jobs with ESHI pay wages that are lower by an average of $6,058 annually, indicating that the compensating di erential for ESHI is only slightly smaller in magnitude than the average cost of ESHI to employers. Because the newly-insured in Massachusetts valued ESHI, they were willing to accept lower wages, and the deadweight loss of mandate-based health reform was less than 5% of what it would have been if the government had instead provided health insurance by levying a tax on wages.
Demand Spillovers, Combative Advertising, and Celebrity Endorsements
Demand Spillovers, Combative Advertising, and Celebrity Endorsements (PDF)
Source: Northwestern University and NBER (Garthwaite)
This paper studies the economic effects of endorsements. In the publishing sector, endorsements are found to be a business stealing form of advertising that raises title level sales without increasing the market size. The endorsements decrease aggregate adult fiction sales; likely as a result of the endorsed books being more difficult than those that otherwise would have been purchased. Economically meaningful sales increases are also found for non-endorsed titles by endorsed authors. These spillover demand estimates demonstrate a broad range of benefits from advertising for firms operating in a multiproduct brand setting.
Strengthening State Capabilities: The Role of Financial Incentives in the Call to Public Service
Strengthening State Capabilities: The Role of Financial Incentives in the Call to Public Service
Source: National Bureau of Economic Research
We study a recent recruitment drive for public sector positions in Mexico. Different salaries were announced randomly across recruitment sites, and job offers were subsequently randomized. Screening relied on exams designed to measure applicants’ intellectual ability, personality, and motivation. This allows the first experimental estimates of (i) the role of financial incentives in attracting a larger and more qualified pool of applicants, (ii) the elasticity of the labor supply facing the employer, and (iii) the role of job attributes (distance, attractiveness of the municipal environment) in helping fill vacancies, as well as the role of wages in helping fill positions in less attractive municipalities. A theoretical model guides each stage of the empirical inquiry. We find that higher wages attract more able applicants as measured by their IQ, personality, and proclivity towards public sector work – i.e., we find no evidence of adverse selection effects on motivation; higher wage offers also increased acceptance rates, implying a labor supply elasticity of around 2 and some degree of monopsony power. Distance and worse municipal characteristics strongly decrease acceptance rates but higher wages help bridge the recruitment gap in worse municipalities.
+ Full Paper (PDF)
Roads to Prosperity or Bridges to Nowhere? Theory and Evidence on the Impact of Public Infrastructure Investment
Roads to Prosperity or Bridges to Nowhere? Theory and Evidence on the Impact of Public Infrastructure Investment (PDF)
Source: Federal Reserve Bank of San Francisco/NBER
We examine the dynamic macroeconomic effects of public infrastructure investment both theoretically and empirically, using a novel data set we compiled on various highway spending measures. Relying on the institutional design of federal grant distributions among states, we construct a measure of government highway spending shocks that captures revisions in expectations about future government investment. We find that shocks to federal highway funding has a positive effect on local GDP both on impact and after 6 to 8 years, with the impact effect coming from shocks during (local) recessions. However, we find no permanent effect (as of 10 years after the shock). Similar impulse responses are found in a number of other macroeconomic variables. The transmission channel for these responses appears to be through initial funding leading to building, over several years, of public highway capital which then temporarily boosts private sector productivity and local demand. To help interpret these findings, we develop an open economy New Keynesian model with productive public capital in which regions are part of a monetary and fiscal union. We show that the presence of productive public capital in this model can yield impulse responses with the same qualitative pattern that we find empirically.
Fiscal Policy in a Depressed Economy
This paper examines logic and evidence bearing on the efficacy of fiscal policy in severely depressed economies. In normal times central banks offset the effects of fiscal policy. This keeps the policy-relevant multiplier near zero. It leaves no space for expansionary fiscal policy as a stabilization policy tool. But when interest rates are constrained by the zero nominal lower bound, discretionary fiscal policy can be highly efficacious as a stabilization policy tool. Indeed, under what we defend as plausible assumptions of temporary expansionary fiscal policies may well reduce long-run debt-financing burdens. These conclusions derive from even modest assumptions about impact multiplier, hysteresis effects, the negative impact of expansionary fiscal policy on real interest rates, and from recognition of the impact of interest rates below growth rates on the evolution of debt-GDP ratios. While our analysis underscores the importance of governments pursuing sustainable long run fiscal policies, it suggests the need for considerable caution regarding the pace of fiscal consolidation in depressed economies where interest rates are constrained by a zero lower bound.
Mandate-Based Health Reform and the Labor Market: Evidence from the Massachusetts Reform
Mandate-Based Health Reform and the Labor Market: Evidence from the Massachusetts Reform (PDF)
Source: National Bureau of Economic Research (via Amanda E. Kowalski, Department of Economics, Yale University)
We model the labor market impact of the three key provisions of the recent Massachusetts and national “mandate-based” health reforms: individual and employer mandates and expansions in publicly-subsidized coverage. Using our model, we characterize the compensating di fferential for employer-sponsored health insurance (ESHI) — the causal change in wages associated with gaining ESHI. We also characterize the welfare impact of the labor market distortion induced by health reform. We show that the welfare impact depends on a small number of “Sufficient statistics” that can be recovered from labor market outcomes. Relying on the reform implemented in Massachusetts in 2006, we estimate the empirical analog of our model. We fi nd that jobs with ESHI pay wages that are lower by an average of $6,058 annually, indicating that the compensating di fferential for ESHI is only slightly smaller in magnitude than the average cost of ESHI to employers. Because the newly-insured in Massachusetts valued ESHI, they were willing to accept lower wages, and the deadweight loss of mandate-based health reform was less than 5% of what it would have been if the government had instead provided health insurance by levying a tax on wages.
The Long-Term Impacts of Teachers: Teacher Value-Added and Student Outcomes in Adulthood
The Long-Term Impacts of Teachers: Teacher Value-Added and Student Outcomes in AdulthoodSource: National Bureau of Economic Research (via Harvard University)
From Executive Summary (PDF):
Overall, our study shows that great teachers create great value and that test score impacts are helpful in identifying such teachers. However, more work is needed to determine the best way to use VA for policy. For example, using VA in teacher evaluations could induce counterproductive responses that make VA a poorer measure of teacher quality, such as teaching to the test or cheating. There will be much to learn about these issues from school districts that start using VA to evaluate teachers. Nevertheless, it is clear that improving the quality of teaching – whether using value-added or other tools – is likely to have large economic and social returns.
Aggregate Impacts of a Gift of Time
How would people spend additional time if confronted by permanent declines in market work? We examine the impacts of cuts in legislated standard hours that raised employers’ overtime costs in Japan around 1990 and Korea in the early 2000s. Using time-diaries from before and after these shocks, we show that these shocks were effective—per-capita hours of market work declined discretely. The economy-wide drops in market work were reallocated solely to leisure and personal maintenance. In the absence of changing household technology a permanent time gift leads to no increase in time spent in household production by the average individual.
How Did the Recession of 2007-2009 Affect the Wealth and Retirement of the Near Retirement Age Population in the Health and Retirement Study?
This paper uses asset and labor market data from the Health and Retirement Study (HRS) to investigate how the recent “Great Recession” has affected the wealth and retirement of those in the population who were just approaching retirement age at the beginning of the recession, a potentially vulnerable segment of the working age population. The retirement wealth held by those ages 53 to 58 before the onset of the recession in 2006 declined by a relatively modest 2.8 percentage points by 2010. In more normal times, their wealth would have increased over these four years. Members of older cohorts accumulated an additional 5 percent of wealth over the same age span. To be sure, a part of their accumulation was the result of the upside of the housing bubble. The wealth holdings of poorer households were least affected by the recession. Relative losses are greatest for those who initially had the highest wealthwhen the recession began.
The adverse labor market effects of the Great Recession are more modest. Although there is an increase in unemployment, that increase is not mirrored in the rate of flow out of full-time work or partial retirement. All told, the retirement behavior of the Early Boomer cohort looks similar, at least so far, to the behavior observed for members of older cohorts at comparable ages.
Very few in the population nearing retirement age have experienced multiple adverse events. Although most of the loss in wealth is due to a fall in the net value of housing, because very few in this cohort have found their housing wealth under water, and housing is the one asset this cohort is not likely to cash in for another decade or two, there is time for their losses in housing wealth to recover.
The Impact of Voluntary Youth Service on Future Outcomes: Evidence from Teach For America
The Impact of Voluntary Youth Service on Future Outcomes: Evidence from Teach For America (PDF)
Source: Harvard University and National Bureau of Economic Research
Nearly one million American youth have participated in service programs such as Peace Corps and Teach For America. This paper provides the first causal estimate of the impact of service programs on those who serve, using data from a web-based survey of former Teach For America applicants. We estimate the effect of voluntary youth service using a sharp discontinuity in the Teach For America application process. Participating in Teach For America increases racial tolerance, makes individuals more optimistic about the life chances of poor children, and makes them more likely to work in education. We argue that these facts are broadly consistent with the “Contact Hypothesis,” which states that, under appropriate conditions, interpersonal contact can reduce prejudice.
Gauging the Generosity of Employer-Sponsored Insurance: Differences Between Households With and Without a Chronic Condition
Gauging the Generosity of Employer-Sponsored Insurance: Differences Between Households With and Without a Chronic Condition (PDF)
Source: National Bureau of Economic Research
We develop an empirical method to assess the generosity of employer-sponsored insurance across groups within the U.S. population. A key feature of this method is its simplicity – it only requires data on out-of-pocket (OOP) health care spending and total health care spending and does not require detailed knowledge of health insurance benefit design. We apply our method to assess whether households with a chronically ill member have more or less generous insurance relative to households with no chronically ill members. We find that the chronically ill have less generous insurance coverage than the non-chronically ill. Additional analyses suggest that the reason for this less generous coverage is not that households with a chronically ill member are in different, less generous plans, on average. Rather, households with a chronically ill member have higher spending on certain types of medical services (e.g., pharmaceutical drugs) that are covered less generously by insurance. Given recent work on value-based insurance design and coinsurance as an obstacle to medication adherence, our findings suggest that the current design of health plans may put the health and financial well-being of the chronically ill at risk.
Health Capital and the Prenatal Environment: The Eff ect of Ramadan Observance During Pregnancy
Health Capital and the Prenatal Environment: The Eff ect of Ramadan Observance During Pregnancy (PDF)
Source: National Bureau of Economic Research
We use the Islamic holy month of Ramadan as a natural experiment in fasting and fetal health. In Michigan births 1989-2006, we find prenatal exposure to Ramadan among Arab mothers results in lower birthweight. Exposure to Ramadan in the first month of gestation is also associated with a sizable reduction in the number of male births. In Census data for Uganda and Iraq we find strong associations between in utero exposure to Ramadan and the likelihood of being disabled as an adult. Effects are particularly large for mental (or learning) disabilities. To a lesser extent, we also find that wealth proxies are compromised. We find no evidence that negative selection in conceptions during Ramadan accounts for our findings, suggesting that avoiding Ramadan exposure during pregnancy is costly or the long-term effects of fasting unknown.
The Impact of No Child Left Behind on Students, Teachers, and Schools
The Impact of No Child Left Behind on Students, Teachers, and Schools (PDF)
Source: NBER and University of Virginia
The controversial No Child Left Behind Act (NCLB) brought test-based school accountability to scale across the United States. This study draws together results from multiple data sources to identify how the new accountability systems developed in response to NCLB have influenced student achievement, school-district finances, and measures of school and teacher practices. Our results indicate that NCLB brought about targeted gains in the mathematics achievement of younger students, particularly those from disadvantaged backgrounds. However, we find no evidence that NCLB improved student achievement in reading. School-district expenditure increased significantly in response to NCLB, and these increases were not matched by federal revenue. Our results suggest that NCLB led to increases in teacher compensation and the share of teachers with graduate degrees. We find evidence that NCLB shifted the allocation of instructional time toward math and reading, the subjects targeted by the new accountability systems.
