the effect of social security contributions on coverage and wages a gender perspective using a natural experiment from colombia author affiliation andres j vargas andres vargas ttu edu acknowledgment i would like to thank steve trejo dan hamermesh gerald oettinger jacqueline angel dan slesnick adriana kugler stefano farne two anonymous referees and seminar participants at the university of texas at austin the second conference on aging in the americas and texas tech university for their insightful and valuable comments i am also grateful to cesar caballero and alejandra corchuelo from the colombian national department of statistics dane for providing me with the data all remaining errors are mine 1 introductiontheoretically social security contributions are considered a benefit linked payroll tax because of the connection between the taxes paid by or on behalf of each worker and that individual s expected benefits hence with the presence of tax benefits linkages workers receive a higher compensation and the contributions are analogous to a price paid for a privately supplied commodity summers 1989 a general payroll tax on the other hand has no linkage to benefits for the individual taxpayer and therefore carries efficiency costs the benefit linkages of social security contributions depend on the extent to which workers perceive that they are getting the contributions back as benefits and on how much the individual values those benefits this depends in turn on the quality of the services offered by the entities financed by the tax if they are perceived as good employees will consider the contributions as a deferred compensation or insurance program and will accept a reduction in the net wage with no employment effects if they are perceived as bad the contributions will be considered as a pure tax with the corresponding effects on employment kesselman 1997 the objective of this article is to investigate from a gender and marital status perspective the effects of pension and health care contributions on the employment and wages of workers covered by social security regulations it is interesting to study colombia because the country implemented a large social security reform in 1993 that allows the identification the labor market effects of these contributions furthermore payments for pension and health care provisions amount to a quarter of the wage bill there this in conjunction with an 11 average contribution for other payroll taxes positions colombia as the country with the highest payroll tax rate in latin america the end of the 1980s and early 1990s was a period of deep structural transformations in latin america these reforms were part of efforts to liberalize economies and increase the participation of the market in the production and allocation of goods and services and were the product of the collapse most economies in the region experienced during the 1980s due to their mounting fiscal and monetary imbalances heckman and pages 2004 these large exogenous shifts in policy regimes offer very good case studies of the interaction between institutions and labor market outcomes the main reforms in colombia during this period included the approval of a new constitution key reforms to the labor market a major trade reform and liberalization in direct foreign investment more than two years after these reforms were put in place colombia implemented a social security reorganization that transformed the institutional framework for pension funds and health care provision law 100 of december 1993 regarding the health care regime the social security reform replaced the existing discretionary affiliation system that covered only the worker with a mandatory one that features a stricter prepayment system and covers also the family of the worker on the subject of pensions the reform introduced a fully funded social security system and gave the workers the choice between this new scheme of individual capitalization of public funds and the existing pay as you go system

fiscal policy coordination with demand spillovers and unionised labour markets we explore the incentives for governments to cooperate by expanding expenditure we have three countries two are in a monetary union the emu the labour markets of both the emu countries are unionised and there is involuntary unemployment in equilibrium we explore the intra and intercountry effects of changes in bargaining power we then examine optimal government expenditures in each emu country we find that there is a positive spillover and that expenditures are strategic complements the coordinated equilibrium involves higher expenditure than the uncoordinated equilibrium

mandate based health reform and the labor market evidence from the massachusetts reform we model the labor market impact of the key provisions of the national and massachusetts mandate based health reforms individual mandates employer mandates and subsidies we characterize the compensating differential for employer sponsored health insurance eshi and the welfare impact of reform in terms of sufficient statistics we compare welfare under mandate based reform to welfare in a counterfactual world where individuals do not value eshi relying on the massachusetts reform we find that jobs with eshi pay 2812 less annually somewhat less than the cost of eshi to employers accordingly the deadweight loss of mandate based health reform was approximately 8 percent of its potential size

japanese and u s firms as foreign investors do they march to the same tune during the 1980s u s and japanese multinationals were attracted by some similar country characteristics low wage inflation low country risk good infrastructure and an educated work force both groups of investors displayed a persistence being strongly attracted to locations with significant past investment japanese firms started the decade as somewhat more fluid but as their investment levels surged they became much more persistent overall u s firms were more influenced by domestic market conditions and moved contrary to changes in host country trade intensity japanese investment had a somewhat greater affinity for trade reflecting their long standing interest in east asia some limited evidence suggests that factors driving the two groups of investors converged in the second half of the 1980s

international fiscal policy transmission the paper examines international transmission of stochastic fiscal policy disturbances in a two country general equilibrium framework with possible excess supply equilibria with underutilization o

entry mode organizational learning and r d in foreign affiliates evidence from japanese firms this paper develops hypotheses concerning the role of entry mode and experience based organizational learning as determinants of the r d intensity of foreign affiliates and tests these hypotheses on a sample of 420 japanese manufacturing affiliates abroad entry mode has a major impact on r d activities the r d intensities of acquired affiliates substantially exceed those in wholly owned greenfield affiliates while the r d intensities of minority owned ventures are higher if japanese parent firms lack strong r d capabilities at home for greenfield operations support is found for an incremental growth pattern of foreign r d as a function of organizational learning and affiliate capability building the results are consistent with the view that part of the explanation for japanese firms relative lack of involvement in overseas r d must be sought in their status as latecomers in the establishment of overseas manufacturing networks at the same time a number of japanese firms have actively used foreign acquisitions and joint ventures to gain access to overseas technology and to establish overseas r d capabilities at a faster pace copyright 2002 john wiley sons ltd

the effects of firm specific taxes and government mandates with an application to the u s unemployment insurance program abstract we examine the common but unexamined case of a tax or government mandate whose cost differs across firms within the same labor market our theoretical model shows that this variation can lead to employment reallocation across firms and dead weight losses even if there is no aggregate employment effect using firm level unemployment insurance tax data we find that while the market level tax is mostly born by the worker individual firms can only pass on a small share of the within market differences thus in some cases differences in taxes across firms can lead to large dead weight losses

understanding the family gap in pay for women with children as the gender gap in pay between women and men has been narrowing the family gap in pay between mothers and nonmothers has been widening one reason may be the institutional structure in the united states which has emphasized equal pay and opportunity policies but not family policies in contrast to other countries that have implemented both the authors now have evidence on the links between one such family policy and women s pay recent research suggests that maternity leave coverage by raising women s retention after childbirth also raises women s levels of work experience job tenure and pay

two decades of income inequality in britain the role of wages household earnings and redistribution we study earnings and income inequality in britain over the past two decades including the period of relatively inclusive growth from 1997 to 2004 and the great recession we focus on the middle 90 where trends have contrasted strongly with the new inequality at the very top household earnings inequality has risen driven by male earnings although a catch up of female earnings did hold down individual earnings inequality and reduce within household inequality nevertheless net household income inequality fell due to deliberate increases in redistribution the tax and transfer system s insurance role during the great recession falling household worklessness and rising pensioner incomes

the consequences of the growth of health insurance premiums in the united states two thirds of the nonelderly population is covered by employerprovided health insurance ehi according to a kaiser family foundation national survey 2003 the cost of ehi has increased by over 59 percent since 2000 with no accompanying increase in the scale or scope of benefits these increases in health insurance premiums may have significant effects on labor markets including changes in the number of jobs hours worked per employee wages and compensation packages indeed it is possible that a significant portion of the increase in the uninsured population may be a consequence of employers shedding this benefit as health insurance premiums rise understanding how labor market characteristics affect adjustments to increased health insurance costs is of vital policy importance some proposals to cover the uninsured rely on employer mandates requiring employers to cover eligible workers other proposals provide tax credits for the purchase of non employer health insurance the effects of these proposals on employment wages and health insurance coverage will be driven by the elasticities of labor supply and demand institutional constraints on wages and compensation packages and how much workers value the increase in health insurance costs since employers provide such coverage voluntarily if workers fully value these benefits and are able to sort between firms based on their preferences then in the absence of other institutional constraints they will bear the cost of the increase via reduced wages with no accompanying change in employment employment costs or employee utility there are many reasons to believe however that firms are limited in their ability to offset increases in the price of health insurance premiums through lower compensation so that increases in the cost of providing health insurance may affect both employment and the structure of work identifying the magnitude of these effects empirically is difficult both because of data availability and because of multiple avenues for causality in this paper we uncover the causal effect of increases in the cost of benefits on labor market outcomes by exploiting an exogenous source of variation in the cost of providing health insurance the recent medical malpractice crisis in which malpractice costs for physicians grew dramatically in some states but not in others the growth in malpractice payments affects malpractice insurance premiums and health insurance premiums but it should not affect other aspects of employment see baicker and chandra 2005b using this source of variation we examine the effect of increases in health insurance premiums on employment patterns earnings and health insurance coverage we find that the cost of increases in health insurance premiums is borne in large part by workers through increased unemployment and also through decreased hours for those workers moved from full time jobs with benefits to parttime jobs without these results have strong implications for the distributional impact of health care reforms both authors economics department dartmouth college 6106 rockefeller hall hanover nh 03755 dartmouth medical school and national bureau of economic research e mails kbaicker dartmouth edu achandra dartmouth edu we thank alan garber seth seabury jonathan skinner and douglas staiger for helpful conversations that have influenced this research program and derek neal aaron yelowitz and conference participants at the berger conference for very insightful comments we are grateful for funding from nia p01 ag19783 02 the opinions in this paper are those of the authors and should not be attributed to the nia or nber 1 based on tabulations of population under age 65 from the march current population survey for 1988 2003 2 there is a wide literature estimating the wage fringe trade off a 1 increase in the value of fringes may be offset by a 1 reduction in wages or a 1 1 tax rate reduction for tax favored benefits for example jonathan gruber 1994 demonstrates that the passage of the pregnancy discrimination act in 1978 resulted in employers shifting the entire cost of the mandate onto employees

firm specific strategic advantages and foreign direct investment behavior of firms the case of japanese semiconductor firms we examine the effects of firm specific strategic advantages on the fdi behavior of japanese semiconductor firms we investigate the strategic advantages necessary for undertaking fdi in this industry and show that these advantages are systematically associated with the variation in fdi behavior we identify technological innovation a broad product line and vertical linkages with down stream businesses as sources of such strategic advantages we also show that size of the firm influences its decision to go international

the labor market effects of rising health insurance premiums we estimate the effect of rising health insurance premiums on wages employment and the distribution of part time and full time work using variation in medical malpractice payments driven by the recent medical malpractice crisis we estimate that a 10 increase in health insurance premiums reduces the aggregate probability of being employed by 1 2 percentage points reduces hours worked by 2 4 and increases the likelihood that a worker is employed only part time by 1 9 percentage points for workers covered by employer provided health insurance this increase in premiums results in an offsetting decrease in wages of 2 3

the terms of trade and the international coordination of fiscal policy this paper develops an example of a noncooperative game between fiscal authorities in two countries the key strategic link between countries is the terms of trade an equilibrium without cooperation is characterized by excessive tax rates and public spending levels in each country the outcome is analogous to the nash equilibrium of the static optimal tarif game in trade theory but in this model there is also a dynamic distortion caused by noncooperative behaviour this dynamic distortion depresses capital accumulation and reduces the equilibrium capital stock in each country numerical examples suggest a significant welfare benefit of cooperation

bankruptcy as implicit health insurance this paper examines the implicit health insurance that households receive from the ability to declare bankruptcy exploiting multiple sources of variation in asset exemption law i show that uninsured households with a greater financial cost of bankruptcy make higher out of pocket medical payments conditional on the amount of care received in turn i find that households with greater wealth at risk are more likely to hold health insurance the implicit insurance from bankruptcy distorts the insurance coverage decision using a microsimulation model i calculate that the optimal pigovian penalties are three quarters as large as the average penalties under the affordable care act

unintended consequences of maternity leave legislation the case of colombia abstract we estimate the impact on female labor outcomes of the extension in maternity leave period from 12 to 14 weeks an amendment to the colombian labor law in 2011 to identify this impact we compare labor market outcomes of different groups of individuals with women of child bearing age first we compared two groups of women with different fertility rates low elasticity of substitution finding that as result of the extension women in the high fertility age group experience an increase in inactivity informality and self employment when comparing high fertility age women with men in the same age group high elasticity of substitution we find that the extension increases the probability of unemployment informality and self employment and decreases wages of women compared with men

international relocation firm and industry determinants this article is the first to explore the determinants of international relocation of a firm it is found that labour intensive firms in a highly industrialized and open economy such as belgium tend to relocate more to other countries than their highly productive capital intensive counterparts access to a global network firm size and the rate of innovation have a positive effect on the probability of relocation uncertainty has a negative impact on the probability of relocation the positive effect of firm size and profitability on the relocation decision is clearly distinct from its effect on the exit decision of a firm

the economic consequences of parental leave mandates lessons from europe this study investigates the economic consequences of rights to paid parental leave in nine european countries over the 1969 through 1993 period since women use virtually all parental leave in most nations men constitute a reasonable comparison group and most of the analysis examines how changes in paid leave affect the gap between female and male labor market outcomes the employment to populations ratios of women in their prime childbearing years are also compared with those of corresponding aged men and older females parental leave is associated with increases in women s employment but with reductions in their relative wages at extended durations

who pays for public employee health costs abstract we analyze the incidence of public employee health benefits because these benefits are negotiated through the political process relevant labor market institutions deviate significantly from the competitive private sector benchmark empirically we find that roughly 15 percent of the cost of recent benefit growth was passed onto school district employees through reductions in wages and salaries strong teachers unions were associated with relatively strong linkages between benefit growth and growth in total compensation our analysis is consistent with the view that the costs of public workers benefits are difficult to monitor contributing to benefit oriented and often under funded compensation schemes

tariff jumping dfi and export substitution japanese electronics firms in europe abstract analysis of micro data on japanese electronics firms establishes that the rapid increase in japanese manufacturing investments in the late 1980s has for a substantial part been induced by ec antidumping and other trade restricting measures targeting japanese firms evidence is found at the firm level that such tariff jumping investment has substituted for exports from japan on the other hand firms which invested in ec distribution activities acquired ec firms or produce components within a vertical keiretsu export relatively more to europe the latter finding suggests that subcontractor firms were able to expand components exports by supplying the european manufacturing plants of their parent firms

extreme wage inequality pay at the very top we provide new evidence on the growth in pay at the very top of the wage distribution in the united kingdom sectoral decompositions show that workers in the financial sector have accounted for the majority of the gains at the top over the last decade new results are also presented on the pay of ceos in the united kingdom we show how improved measurement of pay points to a stronger pay performance link than previously estimated this link is stronger and more symmetric for those firms in which institutional investors play a larger role

industrial groupings and foreign direct investment we explore worldwide foreign direct investment location decisions by japanese manufacturing firms from 1985 through 1991 our conditional logit estimates provide evidence that firms location decisions are affected by membership in either vertical or horizontal keiretsu consistent with previous studies that stress agglomeration effects on firms location decisions we find that the stock of investment in a region by a firm s vertical keiretsu partners increases the probability of location further we find that the recent flow of investment into a region by a firm s horizontal keiretsu partners increases the probability of investment to the region providing evidence of networking effects

structural distortions and decentralized fiscal policies in emu the combination of discretionary monetary policy labor market distortions and nominal wage rigidity yields excessive inflation as monetary policy tries to exploit nominal wage contracts to address labor market distortions an inflation target reduces inflation but creates a conflict between monetary policy and discretionary fiscal policy if fiscal policy is set at a higher frequency than nominal wages are preventing the associated excessive accumulation of public debt calls for debt ceilings if countries differ substantially in terms of structural distortions uniform debt ceilings must be complemented by country specific debt targets in order to prevent decentralized fiscal authorities from employing debt policy strategically

workers should want to pay more for social security i introduction although economic theory cannot resolve all the controversies concerning social security simple supply and demand analysis can helpfully change the terms of the debate concerned with how the social security tax is divided between employers and workers defenders of the existing system typically argue that workers pay only half the tax 6 2 because as required by law the other half is paid by employers opponents of the existing system typically argue that workers pay all of the social security tax because their compensation is reduced by employers to offset their portion of the tax for example former house majority leader dick armey 2005 states that social security alone takes 12 4 percent of workers incomes that s more than most workers pay in income taxes in a reply to armey marilyn scheiner 2005 states that armey should have said that social security alone takes 6 2 percent of workers income the employer matches the employee s contribution for a total of 12 4 percent going into the social security coffers 1 the first thing economic analysis tells us about this debate is that both sides are wrong on the facts barring unlikely conditions the second and more interesting insight is that each side of the debate is making a claim that supports the position of the other side any student in an economic principles course should know that the distribution of a payroll tax burden depends on the relative elasticities of the labor demand and supply curves if the labor supply curve is very inelastic relative to the labor demand curve then most of the burden of a payroll tax will fall on the workers on the other hand if the labor demand curve is very inelastic relative to the labor supply curve most of the burden will fall on the employer so the debate over who bears most of the cost of the social security tax has to consider the relative elasticities of labor supply and demand what the social security legislation states about the distribution of the tax burden is completely irrelevant 2 this may seem to suggest that the opponents supporters of social security should argue that labor supply is less more elastic than labor demand because this implies that less most of the tax burden is borne by the employer but why should the desirability of social security depend on the distribution of the tax burden supposedly there are benefits from social security so its desirability should depend on how those benefits compare to the tax and how the net benefits are distributed even though labor supply and demand elasticities are relevant to the distribution of gains or losses from social security we shall see that the desirability of social security as measured by its net value and its benefits to workers is completely independent of those elasticities once we take into consideration the benefits of social security we find that when advocates and opponents argue over the incidence of the tax they have their arguments completely backward the strongest argument in favor of social security is that workers are paying more than its cost on the other hand the strongest argument against social security is that the burden of financing it falls mostly on employers if employers are paying most of the cost of social security then for the sake of workers it should be scrapped immediately ii social security and shifts in the labor supply and demand curves our argument is based on straightforward implications of labor supply and demand curves shifts in response to the costs and benefits of social security 3 we begin in figure 1 with labor supply curve s and labor demand curve d assumed relevant without before social security the vertical axis represents the monetary wage and the horizontal axis represents the quantity of labor the equilibrium wage and labor quantity are given by w sub b and l sub b respectively

accounting for inequality trends decomposition analyses for the uk 1971 86 eight explanations for uk income inequality trends between 1971 and 1986 are assessed by pooling evidence from inequality index decompositions by population sub group and by income source the principal causes of the aggregate trends were a mixture of changes in earnings inequality employment structure and unemployment but this mixture changed over time the impact of wage inequality changes on income inequality changes fell during the 1970s and 1980s reflecting the secular decline in the importance of employment earnings for household income packages unemployment changes had their largest impact at the start of the 1980s between 1981 and 1986 self employment income changes appear to have had the largest influence

zero hours contracts and labour market policy the evolving nature of atypical work arrangements is studied a particular focus is placed on one such form of work relation zero hour contracts zhcs the paper uses existing secondary data and new survey data collected for the specific purpose of studying alternative work arrangements to describe the nature of zhc work in the uk labour market the interaction with labour market policy is explored in the context of the 2016 introduction of the uk s national living wage zhc work is shown to be an important feature of today s work arrangements and the wage cost shock induced by the new higher minimum wage resulted in an increased use of zhcs in the uk social care sector and in low wage sectors more generally

consumption and income inequality and the great recession abstract we examine changes in consumption and income inequality between 2000 and 2011 during the most recent recession unemployment rose and asset values declined sharply we investigate how the recession affected inequality while addressing concerns about underreporting in consumption data income inequality rose throughout the period from 2000 to 2011 the 90 10 ratio was 19 percent higher at the end of this period than at the beginning in contrast consumption inequality rose during the first half of this period but then fell after 2005 by 2011 the 90 10 ratio for consumption was slightly lower than it was in 2000

business groups in a market economy abstract the purpose of this paper is to examine the nature and significance of the interfirm relationship called the business group first the nature of the japanese business group is discussed it is then pointed out that the business group is not a phenomenon unique to japan and an effort is made to explain the significance of the business group in the context of a market economy using the williamsonian approach to questions of internal organization and the market finally the relationship between the input output relationship of the firms and their group affiliation is tested

nondisclosure as a contract remedy explaining the advance notice puzzle prior theoretical work predicts an underprovision of advance notice contracts stemming from their enforcement costs in the present model it is rather the fundamental inability of workers to alienate their right to quit taken in conjunction with parameters central to job separation decisions that jointly determine the mix of notice and no notice contracts observed in equilibrium not all equilibrium contracts are efficient but there is no underprovision of notice mandating notice cannot improve on joint value and indeed may reduce it furthermore although a mandate can be merely redistributive there are cases in which it harms all parties

does aid matter measuring the effect of student aid on college attendance and completion does student aid increase college attendance or simply subsidize costs for infra marginal students settling the question empirically is a challenge because aid is correlated with many characteristics that influence educational investment decisions a shift in financial aid policy that affects some youth but not others can provide an identifying source of variation in aid in 1982 congress eliminated the social security student benefit program which at its peak provided grants totaling 3 7 billion a year to one out of ten college students using the death of a parent as a proxy for social security beneficiary status i find that offering 1 000 1998 of grant aid increases educational attainment by about 0 16 years and the probability of attending college by four percentage points the elasticities of attendance and completed years of college with respect to schooling costs are 0 7 to 0 8 the evidence suggests that aid has a threshold effect a student who has crossed the hurdle of college entry with the assistance of aid is more likely to continue schooling later in life than one who has never attempted college this is consistent with a model in which there are fixed costs of college entry finally a cost benefit analysis indicates that the aid program examined by this paper was a cost effective use of government resources this abstract was borrowed from another version of this item

the family gap for young women in the united states and britain can maternity leave make a difference in the united states and britain there is a family gap between the wages of mothers and other women differential returns to marital and parental status explain 40 50 of the gender gap another 30 40 is explained by women s lower levels of work experience and lower returns to experience taking advantage of quasi experiments in job protected maternity leave in the united states and britain this article finds that women who had leave coverage and returned to work after childbirth received a wage premium that offset the negative wage effects of children

on the growth of foreign affiliates multinational plant networks joint ventures and flexibility we take a flexibility perspective to analyse employment growth in a large sample of japanese manufacturing affiliates in nine asian countries during the years leading up to and into the asian financial crisis 1995 1999 we find that joint ventures are less flexible than wholly owned affiliates in responding to changing environmental conditions in the focal country and underperform in high growth environments multinational enterprises mnes use the flexibility created by their multinational plant network to adjust affiliate employment in response to labour cost changes in other countries in which they operate plants however no evidence was found that the presence of joint ventures in multinational plant networks reduces this network flexibility our findings suggest that more research is needed on the heterogeneous responses of mnes and their affiliates to changing economic environments

medical care costs how much welfare loss hardly a week goes by without a front page newspaper article on rising health care costs and the uninsured in this article i focus mainly on costs arguing that the issue has been somewhat misconceived while the level of medical care spending in the u s is a cause for concern the welfare losses associated with rises in that level of spending may not be as large as the public rhetoric can make them seem in fact cost containment may not be as urgent as is widely supposed and some proposed cost containment policies may result in welfare losses for the insured and even increase the number of uninsured

the changing role of government in financing health care an international perspective this paper explores the changing role of government involvement in health care financing policy outside the united states it provides a review of the economics literature in this area to elucidate the implications of recent policy changes on efficiency costs and quality our review reveals that there has been some convergence in policies adopted across countries to improve financing incentives and encourage efficient use of health services in the case of risk pooling all countries with competing pools experience similar difficulties with selection and are adopting more sophisticated forms of risk adjustment in the case of hospital competition the key drivers of success appear to be what is competed on and measurable rather than whether the system is public or private in the case of both the success of performance related pay for providers and issues resulting from wait times evidence differs within and across jurisdictions however the evidence does suggest that some governments have effectively reduced wait times when they have chosen explicitly to focus on achieving this goal many countries are exploring new ways of generating revenues for health care to enable them to cope with significant cost growth but there is little evidence to suggest that collection mechanisms alone are effective in managing the cost or quality of care jel h51 i11 i18

infertility insurance mandates and fertility infertility is considered by the medical community to be a disease of the reproductive system it currently affects over 6 million individuals and one in ten couples cannot conceive without medical assistance the psychological effects of infertility have been compared to the effects of other diseases such as cancer and heart disease e g anne t fidler and judith bernstein 1999 and the financial costs of treatment can be quite large however only 25 percent of all health plan sponsors provide coverage for infertility services in response to a perceived need for coverage legislation was introduced at the federal level in 2003 that would require health plans to provide infertility benefits as the fraction of the population affected by infertility continues to rise there are likely to be continued efforts to mandate coverage understanding the costs and benefits of these policies thus becomes increasingly important the first component of a full analysis is to determine whether these mandates will actually have an effect on fertility by reducing the price of infertility treatment one might expect to see an increase in utilization of treatments this could be true if the mandate expands access to individuals who previously could not afford treatment or if individuals who were previously receiving treatment now choose to consume higher quantities or a higher quality of treatment however it is also possible that these mandates have no effect on access or on treatment consumed but simply provide windfall gains to those individuals who would have purchased treatment in the absence of insurance coverage finally mandates may also have dynamic effects on the timing of births individuals could seek treatment earlier which is beneficial from a medical perspective alternatively individuals could further delay childbearing with the knowledge that they will ultimately be covered in this paper i ask the first order question of whether the mandated insurance coverage of infertility treatment has affected birth rates as of 2003 15 states have enacted some form of infertility insurance mandate using a differencein differences approach i exploit variation in the enactment of mandates both across states and over time and identify control groups that should not have been affected by infertility coverage my results suggest that the mandates increase firstbirth rates for women over age 35 by 32 percent

reimbursing health plans and health providers efficiency in production versus selection the tradeoff between an insurer s or medical provider s incentives to select good risks and to produce efficiently is governed by the supply price analog to the demand price tradeoff between moral hazard and risk aversion under a variety of models the optimum supply price is a mixture of capitation and fee for service payments empirical literature shows that pure capitation payment leaves strong incentives for selection that are acted upon the presence of contracting costs in a rothschild stiglitz model means a limited pooling equilibrium can exist and that poor risks will not be at their preferred outcome

the costs of wrongful discharge laws we estimate the effects on employment and wages of wrongful discharge protections adopted by u s state courts during the last three decades we find robust evidence that one wrongful discharge doctrine the implied contract exception reduced state employment rates by 0 8 to 1 7 the initial impact is largest for female and less educated workers those who change jobs frequently while the longer term effect is greater for older and more educated workers those most likely to litigate by contrast we find no robust employment or wage effects of two other widely recognized wrongful discharge laws the public policy and good faith exceptions i introduction w hat is the price of protection this paper estimates the social costs in possibly lower employment and wages of common law protections designed to protect american workers from wrongful discharge economic the ory suggests that employment protection is a double edged sword it provides employment security to incumbent work ers but makes employers reluctant to hire leading to a less flexible labor market with potentially lower employment and wages it is frequently argued that the stagnant employment performance of many european economies during the 1980s and 1990s eurosclerosis can be attributed in part to the significant employment protection given european workers see lazear 1990 and blanchard and wolfers 1999 krueger and pischke 1998 provide a contrasting view among the obstacles to testing this hypothesis is the difficulty of making reliable inferences using cross country comparisons in this paper we study the effects of employment protec tion in the united states numerous scholars have examined the effects of american federal employment laws on em ployment and unemployment acemoglu and angrist 2001 deleire 2000 and jolls and prescott 2004 present evidence that the americans with disabilities act ada decreased employment of disabled persons oyer and schaefer 2000 2002 conclude that the federal civil rights act of 1991 increased the frequency of mass layoffs and raised the returns to experience for workers who have a downward sloping age litigation profile hahn todd and van der klaauw 2001 also evaluate the costs of federal antidiscrimination laws a major hurdle for each of these studies is that these federal statutes apply all at once to the entire country this makes it difficult to separate the effects of the statute from all other changes occurring simulta neously cf donohue 1998 donohue and heckman

international coordination of fiscal policy in limiting economies we examine the limiting behavior of cooperative and noncooperative fiscal policies as countries market power goes to zero we show that these policies converge if countries raise revenues through lump sum taxation however if there are unremovable domestic distortions such as distorting taxes there can be gains to coordination even when a single country s policy cannot affect world prices these results differ from the received wisdom in the optimal tariff literature the key distinction is that contrary to the tariff literature the spending decisions of governments are explicitly modeled

the impact of protective measures for female workers policies designed to protect female workers have controversial effects on labor market outcomes both in theory and in practice the analysis uses repeated cross sections of household survey data for taiwan to estimate the impact of working hours restrictions and maternity benefits differential coverage across industrial sectors and demographic groups provides a unique opportunity to identify the impact of both policies in a single natural experiment framework while working hours restrictions have a negative impact on women s actual hours worked and employment maternity benefits increase these labor inputs implying that women value the opportunity to return to jobs they might otherwise have to leave

estimating the performance effects of business groups in emerging markets business groups confederations of legally independent firms are ubiquitous in emerging economies yet very little is known about their effects on the performance of affiliated firms we conceive of business groups as responses to market failures and high transaction costs in doing so we develop hypotheses about the effects of group affiliation on firm profitability affiliation could either boost or depress firm profitability and members of a group are likely to earn rates of return similar to other members of the same group using a unique data set compiled largely from local sources we test for these effects in 14 emerging markets argentina brazil chile india indonesia israel mexico peru the philippines south africa south korea taiwan thailand and turkey we find evidence that business groups indeed affect the broad patterns of economic performance in 12 of the markets we examine group affiliation appears to have as profound an effect on profitability as does industry membership yet strategy scholars have a much clearer grasp of industries than of groups moreover membership in a group raises the profitability of the average group member in several of the markets we examine this runs contrary to the wisdom conventional in advanced economies that unrelated diversification depresses profitability overall our findings suggest that the roots of sustained differences in profitability may vary across institutional contexts conclusions drawn in one context may well not apply to another copyright 2001 john wiley sons ltd

location specificity and the transferability of downstream assets to foreign subsidiaries we investigate the effect of firm specific advantages being local in scope and the influence of subsequent location specific disadvantages on the choice of foreign entry mode and subsidiary performance to look into this issue we examine japanese fdi data from the wholesale and retail industries two sectors that have productive activity concentrated in downstream processes and location bound resources our theoretical and empirical analyses demonstrate that in situations where required capabilities must be developed through local experience and where location specific resources were subject to market failure acquisition and joint venture strategies were preferred greenfield entries were successful in industries that permitted the offsetting of location specific disadvantages with firm specific advantages from our results we draw implications for the entry mode literature and offer a perspective on the performance of the entry mode choice

who pays the high health costs of older workers evidence from prostate cancer screening mandates between 1992 and 2009 30 us states adopted laws mandating that health insurance plans cover screenings for prostate cancer because prostate cancer screenings are used almost exclusively by men over age 50 these mandates raise the cost of insuring older men relative to other groups this article uses a triple difference empirical strategy to take advantage of this quasi random natural experiment in raising the cost of employing older workers using integrated public use microdata series data from the march supplement of the current population survey i find that the increased cost of insuring older workers results in their receiving 2 8 lower hourly wages being 2 less likely to be employed and being 0 7 less likely to have employer sponsored health insurance

state mandated benefits and employer provided health insurance abstract one popular explanation for the low rate of employee health insurance coverage is the presence of numerous state regulations which mandate that group health insurance plans must include certain benefits by raising the minimum cost of providing any health insurance coverage these mandated benefits make it impossible for firms which would have desired to offer minimal health insurance at a low cost to do so i use data on insurance coverage among employees in small firms to investigate whether this problem is an important cause of employee non insurance i find that mandates have little effect on the rate of insurance coverage this finding is robust to a variety of specifications of the regulations i also find that this lack of an effect may be because mandates are not binding since most firms appear to offer these benefits even in the absence of regulation

the determinants of expatriate staffing by japanese multinationals in asia control learning and vertical business groups we empirically examine the determinants of the decision whether or not to appoint an expatriate as the managing director of overseas affiliates for a sample of 844 japanese manufacturing affiliates operating in asia in 1995 confirmation is found for hypotheses derived both from a control and coordination perspective on expatriation and from a knowledge creation and learning perspective strategic dependence of the parent on the affiliate increases the propensity to appoint expatriates whereas localisation of the affiliate reduces it organisational experience in the country both by the affiliate and by the firm increases the probability that host country nationals will be appointed inter firm relationships within vertical keiretsu groups impact on expatriation policies through inter organisational knowledge exchange in host countries and the mitigation of localisation requirements owing to intra group transactions

employment effects of payroll taxes an empirical test for germany this study tests to what degree the incidence of payroll taxes in germany is on employment and whether in consequence payroll taxes in particular social insurance contributions are the culprit behind the growing unemployment problem using industry level data for 18 years 1977 1994 a system of five dynamic factor demand equations is estimated various simulations indicate that the employment effects of payroll taxes are minimal

technology and the labour market the assessment this article reviews the evidence on how technology will affect labour markets in advanced democracies over the next 10 15 years in addition to assessing evidence on the impact of technology on the aggregate number of jobs we take a wider view to consider how the digital revolution will affect the quality and composition of jobs how and where we work and whether labour is supplied as part of a larger firm or as a self employed micro entrepreneur this assessment further aims to situate the papers covered in this issue of the oxford review of policy within the broader literature

the incidence of mandated maternity benefits i consider the labor market effects of mandates which raise the costs of employing a demographically identifiable group the efficiency of these policies will be largely dependent on the extent to which their costs are shifted to group specific wages i study several state and federal mandates which stipulated that childbirth be covered comprehensively in health insurance plans raising the relative cost of insuring women of childbearing age i find substantial shifting of the costs of these mandates to the wages of the targeted group correspondingly i find little effect on total labor input for that group jel 118 j32 h51 in an era of tight fiscal budget constraints mandating employer provision of workplace benefits to employees is an attractive means for a government to finance its policy agenda consequently in recent years there has been a growth of interest in mandated benefits as a tool of social policy for example the centerpiece of president bill clinton s health care proposal is mandated employer provision of health insurance and more than 20 states have man

internalization and experience japanese banks international expansion 1980 1998 we use an interdisciplinary approach to investigate multinational banks foreign activities we bridge core concepts from the stages theory of internationalization to internalization theory to extend the literature on the defensive expansion hypothesis unlike the primarily aggregate levels of analysis employed in previous research on multinational banking we utilize a firm level analysis of the internationalization experiences of 21 japanese banks in the period 1980 1998 we find that banks undertake foreign direct investment to secure internalization benefits by following their existing clients and to achieve economies of scale in the application of their intangible assets in international markets the magnitude of these relationships however is contingent upon the level of a bank s experience in the host countries consistent with predictions from internationalization theory we find that the motivations for international expansion can change over time

empirical determinants of intertemporal choice abstract we provide new evidence on the empirical determinants of intertemporal financial decisions we use an exogenously imposed choice affecting nearly all croatian retirees to study characteristics associated with choosing a larger deferred stream of payments over a smaller more immediate payment individuals are more willing to defer if they have higher incomes and are not liquidity constrained have a longer time horizon because of better health and longer life expectancy and have stronger bequest motives individuals who expect currency devaluation or political risk to reduce the value of future income are more likely to take the earlier income stream

labor market effects of employer provided health insurance i introduction increasing health insurance coverage is arguably an important policy goal the congressional budget office 2003 estimates that in 1998 20 30 million americans had no health insurance for the entire year approximately 40 million were uninsured at a specific point in time in the year and nearly 60 million were without coverage some time during the year most individuals who have health insurance in the united states obtain it through their employer in 1999 65 8 of nonelderly americans had employer provided insurance also called group insurance or employer sponsored insurance either through their own employer or through the employer of another household member see gruber 2001 employer provided insurance plans generally have lower premiums and offer more benefits than individual insurance plans health insurance providers can offer cheaper and better plans to company employees for at least two reasons first the average administrative cost of such plans is lower than individual plans second employment based plans are typically subject to less adverse selection than individual plans particularly so for large employers furthermore the tax subsidy afforded employment based health insurance renders the effective consumer price substantially lower than the cost see pauly 1986 and gruber 2001 together these various factors give a strong incentive for employers to offer and employees to accept coverage as part of their employment contract as employer provided insurance is by far the most prevalent form of coverage in the private sector policy makers look for further expansion of this base as a way to insure the uninsured while avoiding direct public financing as a way to increase employer based health insurance coverage some states either have or are considering government mandates that require employers to provide insurance to certain types of workers 1 the state of hawaii requires private sector employers to offer health insurance to all workers who work for more than 20 h a week and requires these workers to have insurance the state of california is currently considering a similar mandate there is a considerable interest from policy makers on the effects of such mandates on labor market outcomes in this study we report on an experiment that was designed to provide some insights about possible effects of alternative health insurance regulations on the competitive labor market with a particular focus on mandates since we only considered a competitive market setting with complete contracts and no wage rigidities our results may not be directly applicable to all labor market situations 2 however the study provides useful insights about the interaction of health insurance benefit provision wages and employment structure for labor markets where the competitive wage setting and the complete contracts assumptions are reasonable with these limitations in mind our results can be also generalized to other types of employer provided fringe benefits such as paid vacations or pension plans as any government intervention health insurance regulation may affect the labor market theory predicts that in perfectly competitive labor markets health insurance creates no distortionary effects on the labor market equilibrium as long as the coverage is not mandated and there are no wage rigidities 3 all workers who value insurance above its cost of provision are offered insurance and accept it the wages are adjusted downward see rosen 1986 and gruber 2000 summers 1989 used a simple supply and demand analysis to show that the effect of increases in premiums on equilibrium labor hours and wage depends both on the elasticity of labor demand and labor supply and on how fully workers value changes in the cost of health insurance if the demand or the supply of labor is completely inelastic or if workers fully value the insurance then an increase in the premium would result in an equal decrease shift in wages

the incidence of payroll taxation evidence from chile i provide new evidence on the incidence of payroll taxation by examining the experience of chile before and after the privatization of its social security system this policy change led to a sharp exogenous reduction in the payroll tax burden on chilean firms on average payroll tax rates fell by 25 over 6 years using data from a census of manufacturing firms i estimate that the incidence of payroll taxation is fully on wages with no effect on employment this finding is robust to a variety of empirical approaches to the problem of measurement error in firm level measures of taxes worker

rethinking legal taxonomies for the gig economy both tax law and employment law incentivize engagers of labour to structure their workforce as a crowd of self employed micro entrepreneurs recent technological change and the rise of the gig economy have made it easier for agents to respond to these incentives contributing to an increase in self employment in this article we review the evidence on the rise of the gig economy in the uk and lay out a set of key principles to guide the reform of tax and employment law to better enable policy to meet its underlying objectives

japanese firms and the decision to invest abroad business groups and regional core networks the determinants of the decision by japanese firms to set up manufacturing plants in southeast asia europe and north america are analyzed using micro data on the behavior of firms in the electronics industry while firm specific intangible assets based on r d and marketing efforts are positively related to the decision to invest in europe and north america investment in southeast asia is mainly related to human resources and driven by interfirm ties within horizontal and vertical business groups the empirical results suggest that membership of horizontal keiretsu relaxes liquidity constraints while the manufacturing networks of horizontal and vertical keiretsu in southeast asia facilitate the establishment of manufacturing plants by member firms copyright 1996 by mit press

heterogeneity and the effect of mental health parity mandates on the labor market health insurance benefit mandates are believed to have adverse effects on the labor market but efforts to document such effects for mental health parity mandates have had limited success i show that one reason for this failure is that the association between parity mandates and labor market outcomes vary with mental distress accounting for this heterogeneity i find adverse labor market effects for non distressed individuals but favorable effects for moderately distressed individuals and individuals with a moderately distressed family member on net i conclude that the mandates are welfare increasing for moderately distressed workers and their families but may be welfare decreasing for non distressed individuals

technology growth and expenditure growth in health care in the united states health care technology has contributed to rising survival rates yet health care spending relative to gdp has also grown more rapidly than in any other country we develop a model of patient demand and supplier behavior to explain these parallel trends in technology growth and cost growth we show that health care productivity depends on the heterogeneity of treatment effects across patients the shape of the health production function and the cost structure of procedures such as mris with high fixed costs and low marginal costs the model implies a typology of medical technology productivity i highly cost effective home run innovations with little chance of overuse such as anti retroviral therapy for hiv ii treatments highly effective for some but not for all e g stents and iii gray area treatments with uncertain clinical value such as icu days among chronically ill patients not surprisingly countries adopting category i and effective category ii treatments gain the greatest health improvements while countries adopting ineffective category ii and category iii treatments experience the most rapid cost growth ultimately economic and political resistance in the u s to ever rising tax rates will slow cost growth with uncertain effects on technology growth

how firms grow clustering as a dynamic model of internationalization this paper provides a methodology for identifying the dynamics of international firm expansion demonstrating systematic evidence of both toe in the water and concentrated bursts of internationalization by us multinational enterprises we use the methodology of statistical process control to analyze initial investments in host countries and develop a numerical measure of temporal clustering or bunching using this measure we identify two distinct patterns of growth whereas some firms cluster their investments over time others do not cluster their investments for firms that cluster three types of clustering strategy are identified concentrating hibernating and hybrid arguments based on internal firm architecture experience and learning are advanced to explain these findings

strategic fdi and industrial ownership structure we argue that different industrial ownership structures generate different incentives for firms to engage in fdi a comparison is made between partially cooperative structures such as the japanese kieretsu and korean chaebol systems and competitive structures such as u s firms it is found that ownership structure has significant implications for the probability of initial fdi whether or not a cooperative structure is also coordinated turns out to be crucial in predicting fdi behaviour this has further implications for the optimal fdi incentives of potential host countries and for how empirical studies might be designed jel classification f10 f21 f23 strategie d investissements directs a l etranger et structure de propriete de l industrie les auteurs suggerent que des structures differentes de propriete dans l industrie engendrent des incitations diverses pour les entreprises a investir directement a l etranger on fait des comparaisons entre des structures partiellement cooperatives comme celles des kieretsus au japon et des chaebol en coree et des structures concurrentielles comme celles qui existent aux etats unis il appert que la structure de propriete a un impact significatif sur la probabilite de faire initialement un investissement direct a l etranger le fait que la structure de cooperation engendre aussi une coordination s avere d une importance centrale pour predire le comportement d investissement direct a l etranger voila qui a des implications pour le design des incitations a investir par les pays hotes potentiels et pour le design des etudes empiriques de ces phenomenes

labor market consequences of state health insurance regulation this study based mainly on the 1989 98 march current population surveys finds that state mandated health insurance benefits and small group health insurance reform had no statistically significant effects on labor market outcomes such as the quantity of work wages and whether an employee worked for a small or large firm the number and type of state mandated health insurance benefits were unrelated to weeks of work wages and the prevalence of private insurance coverage but positively associated with weekly work hours extensive small group health insurance reform was associated with a slight decline in the prevalence of private insurance coverage in small firms and this reform affected both full and part time employees less extensive reforms were not generally related to the prevalence of private insurance coverage overall the authors do not find strong evidence that insurance regulations affected labor market outcomes although they appear to cause a small decrease in private coverage

the gains from fiscal cooperation in the two commodity real trade model abstract this paper analyzes the gains from fiscal cooperation within the context of the standard two commodity real trade model it shows how the adjustment in the terms of trade is the critical factor in determining the effects of moving from a noncooperative equilibrium in general a noncooperative equilibrium leads to an overexpansion of government expenditure on the import good relative to a cooperative equilibrium the specific example of a logarithmic economy is also considered the paper discusses further the welfare effects resulting from the formation of a coalition of two countries among three

fiscal policy coordination and emu a dynamic game approach abstract this paper examines the case for fiscal policy coordination in a european economic and monetary union emu a two bloc model with two market structures is examined emu producing a single homogeneous good in both blocs emu1 and a two good emu emu2 where each bloc produces a single home good the european central bank sets monetary policy so as to achieve credibly low inflation rates we find that for emu2 as relative prices can change countries have an incentive to improve their terms of trade leading to an inefficient noncooperative outcome which can be avoided by cooperation

real options and foreign affiliate divestments a portfolio perspective this paper develops a real options portfolio perspective on foreign affiliate divestments affiliates are less likely to be divested in response to adverse environmental change if they represent growth or switch option value to the multinational firm under conditions of macroeconomic uncertainty however the affiliate is partially redundant to the option value of the multinational firm s affiliate portfolio if the affiliate shares the manufacturing platform role in the host country with other affiliates or if macroeconomic conditions of the host country are highly correlated with those of other countries in which the multinational firm operates affiliates we find strong support for these arguments in tests on a comprehensive sample of 1078 asian manufacturing affiliates of japanese electronics multinationals

building capabilities for international operations through networks a study of indian firms in this study we seek to explain how firms from emerging markets build capabilities to operate in international markets through learning from parental networks the building of these capabilities is of particular interest as firms from emerging markets may not necessarily possess the monopolistic advantages commonly referred to in ib literature which allow a firm to succeed in international markets using lagged cross sectional regression models on a sample of 794 indian firms we found that firms draw on the international experience of their parental and foreign networks to build such capabilities findings also indicate that network scope is beneficial for increasing exposure to international markets only in the case of networks that are either small or medium sized additionally we found that firms lacking market power in their home market benefit through foreign partnerships when internationalizing operations

multilevel models in international business research multiple level or mixed linear modeling mlm can simultaneously test hypotheses at several levels of analysis usually two or three or control for confounding effects at one level while testing hypotheses at others advances in multi level modeling allow increased precision in quantitative international business ib research and open up new methodological and conceptual possibilities however they create new challenges and they are still not frequently used in ib research in this editorial we outline some key methodological issues for the uses of mlm in ib including criteria sample size and measure equivalence issues we then examine promising directions for future multilevel ib research considering comparative opportunities at nation multiple nation cluster and within nation region levels including large multilevel databases we also consider its promise for mne research about semi globalization interorganizational effects across nations clusters within nations and teams and subsidiaries within mnes

channels of international policy transmission abstract four channels of international budgetary and monetary policy transmission are analysed within the context of nominal wage sluggishness the first is based on capital gains on holdings of foreign assets spill over effects arising through the second and third channels depend on whether home and foreign goods are gross substitutes or gross complements and on whether the elasticity of intertemporal substitution is less or greater than one the final channel assumes finite lifetimes and no bequest motive it departs from debt neutrality in order to give a non trivial role to wealth effects and current account dynamics

the response of wages to protective labor legislation evidence from canada using micro data from the 1986 87 canadian labour market activity survey the author examines the wage effect of laws requiring advance notice of layoffs and in some cases also requiring severance payments to laid off workers the results suggest that incumbent workers protected by advance notice and severance pay laws were able to extract higher wages than were incumbent workers unprotected by such laws there is evidence however that the ultimate wage effect differed by workers union status starting wages of nonunion workers appear to have fallen to offset the subsequent wage increase indicating that nonunion workers may pay for advance notice and severance pay laws whereas union workers who were protected by such laws seem to have been able to exploit their bargaining position to increase their lifetime earnings

who pays for obesity evidence from health insurance benefit mandates is there an obesity externality in the late 1990s and early 2000s many state governments began requiring health insurance plans to cover treatments for diabetes using difference in difference analysis of restricted geocode data from the 1979 national longitudinal survey of youth to compare wages across states with and without diabetes mandates i find that obese people pay for all of their own increased health costs in the form of lower wages rather than passing them on to employers insurers and co workers

adverse selection and an individual mandate when theory meets practice we develop a model of selection that incorporates a key element of recent health reforms an individual mandate using data from massachusetts we estimate the parameters of the model in the individual market for health insurance we find that premiums and average costs decreased significantly in response to the individual mandate we find an annual welfare gain of 4 1 per person or 51 1 million annually in massachusetts as a result of the reduction in adverse selection we also find smaller post reform markups

the effects of expanding the generosity of the statutory sickness insurance system summary this article evaluates an expansion of employer mandated sick leave from 80 to 100 of forgone gross wages in germany we employ and compare parametric difference in difference did matching did and mixed approaches overall workplace absences increased by at least 10 or 1 day per worker per year we show that taking partial compliance into account increases coefficient estimates further heterogeneity in response behavior was of great importance there is no evidence that the increase in sick leave improved employee health a finding that supports a shirking explanation finally we provide evidence on potential labor market adjustments to the reform copyright 2013 john wiley sons ltd

health insurance market reform and employee compensation the case of pure community rating in new york abstract pure community rating which was enacted to improve access to health insurance in new york s small group market in 1993 prevents carriers from charging different premiums based on the ages of a firm s workers if small firms were adjusting compensation packages prior to reform to offset higher health care costs of older workers then community rating could lead to greater relative wages for older workers post reform and not necessarily induce adverse selection that results in changes in who is insured i present evidence showing that relative wages of older workers in small firms increased in comparison with other states and with large firms within new york following reform

pension reform and gender gaps in latin america what are the policy options abstract several latin american countries have implemented structural reforms in their social security pension systems these reforms have modified the traditional public pay as you go defined benefit payg db schemes introducing multipillar systems where fully funded defined contribution ff dc schemes play an important role gender gaps in coverage and benefits under pagy db and ff dc schemes have been one of the policy issues missing in most of the reforms in part because it has been certainly underresearched in the literature this paper studies the sources of pension gender gaps and provides the pros and cons of a set of policy options that may contribute to overcoming the gaps found in both schemes these policies are divided on the one hand into specific policies that directly affect the determination of pension benefits by modifying formula design or eligibility conditions and on the other hand policies that indirectly affect the level of benefits and the likelihood of being entitled to them by changing incentives in labor market conditions