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Author:
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ISBN:
Category : Households
Languages : en
Pages : 95
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This thesis explores issues related to public and private insurance of income shocks, and the importance of human capital accumulation. The first chapter argues that the intertemporal elasticity of substitution of labor supply is a state-dependent variable which strongly depends on the return to human capital accumulation. Estimating a life cycle model I find that the average i.e.s. is low (0.35), and comparable with micro estimates, even in the presence of human capital. However, the average i.e.s. hides important heterogeneity: for college graduates the i.e.s. more than doubles over the life cycle, whereas it increases by about 58 percent for workers without a college degree. The second chapter argues that heterogeneous returns to human capital accumulation affects the degree to which search effort of unemployed deviates from the socially optimal level, and the reason behind the deviation. I find that (i) the main social costs associated with unemployment insurance are not due to moral hazard problems, but are due to distortionary effects of labor income taxes needed to finance the insurance. (ii) The magnitude of the moral hazard problem and the tax distortion problem differs substantially by age and education. And, (iii) the degree of tax progressiveness and benefit regressiveness has important effects on the deviation of search effort. The third chapter studies the relation between co-movement of income shocks and precautionary asset holdings. If households perceive spousal labor supply as an insurance mechanism, it is evident that this mechanism should work better the lower the co-movement of income shocks. We find that (i) households in which both spouses have the same education level or work in the same industry have a higher correlation of income shocks compared to couples with different education/industry. And, (ii) households who face larger co-movements of income shocks hold larger precautionary buffers.
Author:
Publisher:
ISBN:
Category : Households
Languages : en
Pages : 95
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Book Description
This thesis explores issues related to public and private insurance of income shocks, and the importance of human capital accumulation. The first chapter argues that the intertemporal elasticity of substitution of labor supply is a state-dependent variable which strongly depends on the return to human capital accumulation. Estimating a life cycle model I find that the average i.e.s. is low (0.35), and comparable with micro estimates, even in the presence of human capital. However, the average i.e.s. hides important heterogeneity: for college graduates the i.e.s. more than doubles over the life cycle, whereas it increases by about 58 percent for workers without a college degree. The second chapter argues that heterogeneous returns to human capital accumulation affects the degree to which search effort of unemployed deviates from the socially optimal level, and the reason behind the deviation. I find that (i) the main social costs associated with unemployment insurance are not due to moral hazard problems, but are due to distortionary effects of labor income taxes needed to finance the insurance. (ii) The magnitude of the moral hazard problem and the tax distortion problem differs substantially by age and education. And, (iii) the degree of tax progressiveness and benefit regressiveness has important effects on the deviation of search effort. The third chapter studies the relation between co-movement of income shocks and precautionary asset holdings. If households perceive spousal labor supply as an insurance mechanism, it is evident that this mechanism should work better the lower the co-movement of income shocks. We find that (i) households in which both spouses have the same education level or work in the same industry have a higher correlation of income shocks compared to couples with different education/industry. And, (ii) households who face larger co-movements of income shocks hold larger precautionary buffers.
Author: Armand Arief Sim
Publisher:
ISBN:
Category :
Languages : en
Pages : 210
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This dissertation consists of three chapters that study the consequences of income or price shocks on important economic dimensions of villages, households, and individuals, and how they respond to these shocks. The first chapter investigates whether local governments respond to local economic shocks. I use heterogeneity in the effects of rice import restriction on rice price shocks across Indonesian villages to investigate public resources provision responses to local price shock. To this end, I combine village agro-climatic conditions for growing rice with provincial rice price over time to construct plausibly exogenous price shocks at the village level. Using a comprehensive longitudinal dataset of 53,000 villages, I find that an increase in rice price is associated with negative income growth in villages less suited for growing rice, and local governments responded to it by increasing public resources -- public health facilities and financial capital assistance -- towards those villages. The effects on public health facilities (financial assistance) are only significant in high (low)-inequality villages. Increased social capital only in low-equality villages can provide a plausible explanation for the heterogeneous result on financial assistance projects. I also show that an increase in public health facilities was associated with a reduction in infant mortality suggesting evidence of good targeting by local governments. The second chapter (co-authored with Patrick Asuming and Hyuncheol Bryant Kim) investigates the long-run effects of a health insurance subsidy in Ghana, where mandates are not enforceable. We randomly provide different levels of subsidy (1/3, 2/3, and full), with follow-up surveys seven months and three years after the intervention. We find that a one-time subsidy promotes insurance enrollment for all treatment groups, but long-run health care service utilization increases only for the partial subsidy groups. Selection explains this pattern: those who were enrolled due to the subsidy, especially the partial subsidy, are more ill and have greater health care utilization. A careful enforcement of mandatory enrollment is necessary to prevent selection. The third chapter (co-authored with Asep Suryahadi and Daniel Suryadarma) measures the effect of child market work on the long-term growth of human capital, focusing on the output of the human capital production: mathematics skills, cognitive skills, pulmonary function, and educational attainment. Our full sample is drawn from a rich longitudinal dataset Indonesia Family Life Survey (IFLS). We address endogeneity of child market work using provincial legislated minimum wage as the instrument. Our instrumental variable estimation shows that child labor negatively affects mathematics skills and pulmonary function, but not cognitive skills and educational attainment. We find heterogeneities in type of work. Those who work outside of family business have lower educational attainment than those working for family business.
Author:
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ISBN:
Category :
Languages : en
Pages :
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Essays on economic policy: Income inequality and health insurance.
Author: Can Cui (Ph. D.)
Publisher:
ISBN:
Category :
Languages : en
Pages : 328
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This dissertation examines several questions in public finance, including health care, workers' compensation program, and tax rebates. The first chapter, entitled, "Financial Incentives and Physicians’ Behavior: Evidence from Texas Workers’ Compensation Medical Claims", examines whether financial incentives influence the quantity and composition of medical care provided by physicians. I study this question by leveraging an administrative change in the maximum allowed reimbursement rates for surgical services performed in a hospital setting for Texas Workers' Compensation medical claims. I document evidence of strong substitution in the location of care, indicating that many surgical services can be provided in either a hospital or office setting. I find that the 2% increase in surgical services provided in a hospital setting in response to this reform is fully offset by reduced utilization in an office setting. I also find that nonsurgical services performed in a hospital increased in response to the reform, suggesting surgical and nonsurgical services are complements with respect to physician financial incentives. More generally, my results suggest that the location of care is responsive to financial incentives, and an optimal payment policy should account for substitution along this margin. The second chapter, entitled "Cash-on-Hand and Demand for Credit", examines the effect of tax rebates on demand for small dollar credit loans. Subprime consumers often use small dollar credit to meet short-term financial needs over pay cycles. However, relatively little is known about the income sensitivity of demand for credit in this market. This chapter provides a causal estimate of the effect of tax rebates on the demand for small dollar credit, using shocks from the Earned Income Tax Credit (EITC) benefits and a unique proprietary loan-level dataset. The results show that a $100 increase in EITC benefits leads to a 8.3% in the number of loan applications and a 6.6% reduction in the number of borrowers. This could translate into sizable reductions in loan volume and savings in financial charges. The estimates are robust to various specifications checks. The results further indicate that EITC recipients are liquidity constrained. More broadly, the results suggest that public programs with income benefits could help recipients with consumption smoothing in the presence of credit market frictions. The third chapter, entitled "Take-up of Workers' Compensation Insurance in Texas", is coauthored with Marika Cabral and Michael Dworsky. This chapter examines how employers choose to provide benefits for their workers. Workers' compensation program is a large government program which provides monetary and medical benefits to injured workers. Texas is currently the only state that allows voluntary participation. Using difference-in-differences variation in regulated manual premium, this paper empirically analyzes employers' take-up of workers' compensation insurance coverage. We find that 10% increase in regulated premium reduces the number of covered firms by 2%, with similar effect on covered payroll.
Author: Neale Ashok Mahoney
Publisher: Stanford University
ISBN:
Category :
Languages : en
Pages : 215
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This dissertation has four chapters. The first three chapters examine health insurance markets in the U.S., focusing in particular on contexts where there are important interactions between health insurance plans. The fourth chapter is on the U.S. budget, examining the implications of annual budget cycles on the quantity and quality of end-of-year spending. Chapter 1, entitled "Bankruptcy as Implicit Health Insurance" examines the interaction between health insurance and the implicit insurance that people have because they can file (or threaten to file) for bankruptcy. With a simple model that captures key institutional features, I demonstrate that the financial risk from medical shocks is capped by the assets that could be seized in bankruptcy. For households with modest seizable assets, this implicit "bankruptcy insurance" can crowd out conventional health insurance. I test these predictions using variation in the state laws that specify the type and level of assets that can be seized in bankruptcy. Because of the differing laws, people who have the same assets and receive the same medical care face different losses in bankruptcy. Exploiting the variation in seizable assets that is orthogonal to wealth and other household characteristics, I show that households with fewer seizable assets are more likely to be uninsured. This finding is consistent with another: uninsured households with fewer seizable assets end up making lower out-of-pocket medical payments. The estimates suggest that if the laws of the least debtor-friendly state of Delaware were applied nationally, 16.3 percent of the uninsured would buy health insurance. Achieving the same increase in coverage would require a premium subsidy of approximately 44.0 percent. To shed light on puzzles in the literature and examine policy counterfactuals, I calibrate a utility-based, micro-simulation model of insurance choice. Among other things, simulations show that "bankruptcy insurance" explains the low take-up of high-deductible health insurance. Chapter 2, entitled "Pricing and Welfare in Health Plan Choice", is coauthored with M. Kate Bundorf and Jonathan Levin. The starting point for the paper is the simple observation that when insurance premiums do not reflect individual differences in expected costs, consumers may choose plans inefficiently. We study this problem in health insurance markets, a setting in which prices often do not incorporate observable differences in expected costs. We develop a simple model and estimate it using data on small employers. In this setting, the welfare loss compared to the feasible risk-rated benchmark is around 2-11% of coverage costs. Three-quarters of this is due to restrictions on risk-rating employee contributions; the rest is due to inefficient contribution choices. Despite the inefficiency, the benefits from plan choice relative to each of the single-plan options are substantial. Chapter 3, entitled "The Private Coverage and Public Costs: Identifying the Effect of Private Supplemental Insurance on Medicare Spending, " is coauthored with Marika Cabral. While most elderly Americans have health insurance coverage through Medicare, traditional Medicare policies leave individuals exposed to significant financial risk. Private supplemental insurance to "fill the gaps" of Medicare, known as Medigap, is very popular. In this Chapter, we estimate the impact of this supplemental insurance on total medical spending using an instrumental variables strategy that leverages discontinuities in Medigap premiums at state boundaries. Our estimates suggest that Medigap increases medical spending by 57 percent--or about 40 percent more than previous estimates. Back-of-the-envelope calculations indicate that a 20 percent tax on premiums would generate combined revenue and savings of 6.2 percent of baseline costs; a Pigovian tax that fully accounts for the fiscal externality would yield savings of 18.1 percent. Chapter 4, entitled "Do Expiring Budgets Lead to Wasteful Year-End Spending? Evidence from Federal Procurement, " is coauthored with Jeffrey Liebman. Many organizations fund their spending out of a fixed budget that expires at year's end. Faced with uncertainty over future spending demands, these organizations have an incentive to build a buffer stock of funds over the front end of the budget cycle. When demand does not materialize, they then rush to spend these funds on lower quality projects at the end of the year. We test these predictions using data on procurement spending by the U.S. federal government. Using data on all federal contracts from 2004 through 2009, we document that spending spikes in all major federal agencies during the 52nd week of the year as the agencies rush to exhaust expiring budget authority. Spending in the last week of the year is 4.9 times higher than the rest-of-the-year weekly average. We examine the relative quality of year-end spending using a newly available dataset that tracks the quality of $130 billion in information technology (I.T.) projects made by federal agencies. Consistent with the model, average project quality falls at the end of the year. Quality scores in the last week of the year are 2.2 to 5.6 times more likely to be below the central value. To explore the impact of allowing agencies to roll unused spending over into subsequent fiscal years, we study the I.T. contracts of an agency with special authority to roll over unused funding. We show that there is only a small end-of-year I.T. spending spike in this agency and that the one major I.T. contract this agency issued in the 52nd week of the year has a quality rating that is well above average.
Author: Eric Doviak
Publisher:
ISBN:
Category : Health insurance
Languages : en
Pages : 0
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Author: Ian Eric Van Wincoop
Publisher:
ISBN:
Category : Economic stabilization
Languages : en
Pages : 454
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Author: Marika Ilona Cabral
Publisher: Stanford University
ISBN:
Category :
Languages : en
Pages : 290
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This dissertation consists of four distinct essays. In an essay entitled "Claim Timing and Ex Post Adverse Selection: Evidence from Dental 'Insurance, ' " I explore the impact of strategic timing on insurance market allocations. If people can delay a claim just long enough to buy more insurance coverage in anticipation of it, severe adverse selection may result, and in extreme cases, this can lead to the complete unraveling of an insurance market. I study these forces by analyzing dental treatments and insurance, with the goal of understanding insurance in the market for dental care and also revealing lessons that apply to insurance markets more broadly. Using rich claim-level data from a large firm, my analysis reveals that the strategic delay of treatment and the associated adverse selection may be an important factor in explaining why so few people have dental coverage in the US and why typical dental "insurance" contracts provide so little insurance. More generally, my results suggest that insurance products without contract features designed to limit coverage for strategically delayed costs (e.g., open-enrollment periods, pricing pre-existing conditions) may generate unraveling. An essay entitled "The Hated Property Tax: Salience, Tax Rates, and Tax Revolts" (with Caroline Hoxby), explores the relationship between the salience of the property tax and observed property tax rates. We hypothesize that high salience explains the unpopularity of the property tax, the level of the property tax, and prevalence of property tax revolts. To identify variation in the salience of the property tax over local jurisdictions and over time, we exploit conditionally random variation in tax escrow, a method of paying the property tax that makes it much less salient. We find that areas in which the property tax is less salient are areas in which property taxes are higher and property tax revolts are less likely to occur. In an essay entitled "Private Coverage and Public Costs: Identifying the Effect of Private Supplemental Insurance on Medicare Spending" (with Neale Mahoney), we explore the impact of private supplemental insurance on Medicare spending. Private supplemental insurance to "fill the gaps" of Medicare, known as Medigap, is very popular. We estimate the impact of this supplemental insurance on total medical spending using an instrumental variables strategy that leverages discontinuities in Medigap premiums at state boundaries. Our estimates suggest that Medigap increases medical spending by 57 percent---or about 40 percent more than previous estimates suggest. Back-of-the-envelope calculations indicate that a 20 percent tax on premiums would generate combined revenue and savings of 6.2 percent of Medicare baseline costs. An essay entitled "The Effect of Insurance Coverage on Preventive Care" (with Mark Cullen), explores the effect of insurance coverage on preventive care utilization. Using health insurance claims data from a large company, this paper examines the implementation of an insurance benefit design which differentially increased the marginal price of curative care (non-preventive care) while decreasing the marginal price of prevention. We examine the effect of the differential price change on the use of preventive procedures. We reveal evidence consistent with an important negative cross-price effect; that is, increases in the price of curative care can depress preventive care utilization.
Author: Elira Kuka
Publisher:
ISBN: 9781339065137
Category :
Languages : en
Pages :
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This dissertation focuses on understanding how government policies such as the Unemployment Insurance (UI) and the Earned Income Tax Credit (EITC) help buffer economic shocks due to job loss or recessions. The Unemployment Insurance (UI) program was the largest safety net program during the Great Recession, providing cash benefits to more than 10 million individuals who lost their jobs during this period. While the literature of the effects of UI on job search and unemployment duration has been extensive, and particularly active since the Great Recession, research on the benefits of the program on individual wellbeing has been limited. Given that understanding these potential benefits is key to designing the optimal level of UI benefits, the first two chapters of my dissertation focus on empirically quantifying such benefits. Chapter 1, joint with Chloe N. East, extends Gruber's (1997) pioneering work on the food consumption smoothing benefits of UI by adding data from the last two decades of the Panel Study of Income Dynamics (PSID), a period during which the economy and the safety net underwent many changes. Our results show that, while the food consumption smoothing effects of UI are strong in the 1970s and the 1980s, consistent with Gruber (1997), these effects are smaller in the last two decades. We find new evidence that the protective effects of UI are strongest during recessions, and that the 1990s decline in UI's protective effects is in part driven by the decrease in average UI program generosity. Finally, we find no evidence that this decline is driven by other factors, such as changes in other safety net programs, changes in selection into unemployment, or changes in the fraction of income that families spend on food. Chapter 2 analyzes the health status, health utilization, and risky behaviors of displaced individuals. Given that job loss has been associated with decreased health and increased mortality, this paper uses the 1993-2012 Behavioral Risk Factor Surveillance System (BRFSS) and Survey of Income and Program Participation (SIPP) to empirically estimate whether UI generosity mitigates any of the negative health effects of job loss. The empirical strategy relies on exploiting variation in the generosity of UI benefits caused by exogenous changes in state UI laws, similar to Gruber (1997). The results show higher UI generosity increases health insurance coverage and health utilization and improves self-reported health. Moreover, I find that these effects are stronger during periods of high unemployment rates. Finally, I find no effects on healthy or risky behaviors, nor on health conditions such as diabetes and blood pressure. Finally, Chapter 3 (joint with Marianne Bitler and Hilary Hoynes) analyzes the response to business cycles of the Earned Income Tax Credit (EITC). The U.S. safety net has undergone a dramatic transformation in the past fifteen years, with a substantial increase in "in-work" assistance through the EITC. Thus we evaluate whether the EITC satisfies a defining feature of a safety net program -- that it responds to economic need. In particular, we explore how EITC participation and expenditures change with the business cycle, which is theoretically ambiguous since the EITC requires positive earned income. We use administrative IRS data from 1996--2008, and our results show that higher unemployment rates lead to higher EITC caseloads for married couples, but not for single individuals. These patterns are consistent with static labor supply theory, and how economic shocks are likely to affect one versus two-earner households.
Author: Maria-Luisa Escobar
Publisher: Brookings Institution Press
ISBN: 0815705468
Category : Social Science
Languages : en
Pages : 239
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Over the past twenty years, many low- and middle-income countries have experimented with health insurance options. While their plans have varied widely in scale and ambition, their goals are the same: to make health services more affordable through the use of public subsidies while also moving care providers partially or fully into competitive markets. Until now, however, we have known little about the actual effects of these dramatic policy changes. Understanding the impact of health insurance-based care is key to the public policy debate of whether to extend insurance to low-income populationsand if so, how to do itor to serve them through other means.
