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General Equilibrium Effects of Insurance Expansions: Evidence from Long-Term Care Labor Markets
Get PDFArrow (1963) hypothesized that demand-side moral hazard induced by health insurance leads to supply-side expansions in healthcare markets. Capturing these effects empirically has been challenging, as non-marginal insurance expansions are rare and detailed data on healthcare labor and capital is sparse. We combine administrative labor market data with the geographic variation in the rollout of a universal insurance program—the introduction of long-term care (LTC) insurance in Germany in 1995—to document a substantial expansion of the inpatient LTC labor market in response to insurance expansion. A 10 percentage point expansion in the share of insured elderly leads to 0.05 (7%) more inpatient LTC firms and four (13%) more workers per 1,000 elderly in Germany. Wages did not rise, but the quality of newly hired workers declined. We find suggestive evidence of a reduction in old-age mortality. Using a machine learning algorithm, we characterize counterfactual labor market biographies of potential inpatient LTC hires, finding that the reform moved workers into LTC jobs from unemployment and out of the labor force rather than from other sectors of the economy. We estimate that employing these additional workers in LTC is socially efficient if patients value the care provided by these workers at least at 25% of the market price for care. We show conceptually that, in the spirit of Harberger (1971), in a second-best equilibrium in which supply-side labor markets do not clear at perfectly competitive wages, subsidies for healthcare consumption along with the associated demand-side moral hazard can be welfare-enhancing
Options for Unemployment Insurance Structural and Administrative Reform: Proposals and Analysis
Get PDFThe unemployment insurance (UI) program is broken. UI benefits and taxes are out of balance, with benefit payments tending to exceed tax revenues, while the program is unable to provide adequate reemployment services to permanently separated UI recipients. The current crisis in the UI program has been building over the past four decades. Although UI and Social Security were both enacted as part of the Social Security Act, reforms to the programs have diverged sharply. Congress has frequently amended the Social Security program to increase benefits and taxes, and then in 1972 it enacted a permanent annual cost-of-living adjustment (COLA) for inflation. Congress, however, has not enacted a similar COLA for UI. Likewise, Congress has periodically enacted major structural reforms to the Social Security program, while only once since World War II—in 1976—has it enacted a major reform of the UI program. Furthermore, in the absence of federal direction, benefit recipiency, adequacy, and duration have declined in many states because of the lack of political support for enacting adequate benefit and tax provisions. As a result, this paper recommends comprehensive and periodic UI legislative reform, including establishing a process by which UI benefits and taxes are adjusted automatically. To implement such major reform, three options are suggested for administering a reformed UI program: 1) maintaining the current federal-state structure with expanded federal standards with which state UI programs must comply; 2) a single federal program administered by the U.S. Department of Labor and carried out by state UI agencies as agents of the federal government; and 3) a national program that transfers to the Social Security Administration the administration of UI benefits and taxes, as well as the provision of reemployment services
Unemployment Insurance and Means-Tested Program Interactions: Evidence from Administrative Data
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Introduction [to Evolving Approaches to the Economics of Public Policy: Views of Award-Winning Economists]
No full textAlternative Economic Indicators
Get PDFPolicymakers and business practitioners are eager to gain access to reliable information on the state of the economy for timely decision making. More so now than ever. Traditional economic indicators have been criticized for delayed reporting, out-of-date methodology, and neglecting some aspects of the economy. Recent advances in economic theory, econometrics, and information technology have fueled research in building broader, more accurate, and higher-frequency economic indicators. This volume contains contributions from a group of prominent economists who address alternative economic indicators, including indicators in the financial market, indicators for business cycles, and indicators of economic uncertainty.https://research.upjohn.org/up_press/1283/thumbnail.jp
The Earned Income Tax Credit and Maternal Time Use: More Time Working and Less Time with Kids?
Get PDFParents spend considerable sums investing in their children’s development, with their own time among the most important forms of investment. Given well-documented effects of the Earned Income Tax Credit (EITC) on maternal labor supply, it is natural to ask how the EITC affects other time allocation decisions, especially time with children. We use the American Time Use Surveys to study the effects of EITC expansions since 2003 on time devoted to a broad array of activities, with considerable attention to the amount and nature of time spent with children. Our results confirm prior evidence that the EITC increases maternal work and reduces time devoted to home production and leisure. More novel, we show that the EITC also reduces time spent with children; however, almost none of the reduction comes from time devoted to “investment” activities. Effects are concentrated among socioeconomically disadvantaged mothers, especially those that are unmarried. Results are also most apparent for mothers of young children. Altogether, our results suggest that the increased work associated with EITC expansions over time has done little to reduce the time mothers devote to active learning and development activities with their children
