are health insurance markets competitive to gauge the competitiveness of the group health insurance industry i investigate whether health insurers charge higher premiums ceteris paribus to more profitable firms such direct price discrimination is feasible only in imperfectly competitive settings using a proprietary national database of health plans offered by a sample of large multisite firms from 1998 2005 i find firms with positive profit shocks subsequently face higher premium growth even for the same health plans moreover within a given firm those sites located in concentrated insurance markets experience the greatest premium increases the findings suggest health care insurers are exercising market power in an increasing number of geographic markets

labor market effects of hawaii s mandatory employer provided health insurance the author analyzes how mandatory employer provision of health insurance in hawaii which became law in 1974 affected workers wages employment and insurance coverage between 1970 and 1990 the

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

facilitating consumer learning in insurance markets what are the welfare effects we model a monopoly insurance market where consumers can learn their accident risks at a cost c we then ask what are the welfare effects of a policy that reduces c if c is sufficiently small c c marginally reducing c hurts the insurer and weakly benefits the consumer finally a reduction in c that is successful meaning that the consumer gathers information after the reduction but not before it can hurt both parties this article is protected by copyright all rights reserved

the medicaid notch labor supply and welfare participation evidence from eligibility expansions i assess the impact of losing public health insurance on labor market decisions of women by examining a series of medicaid eligibility expansions targeted toward young children these targeted expansions severed the historical tie between afdc and medicaid eligibility the reforms allowed a mother s earnings to increase without losing public health insurance for her young children increasing the income limit for medicaid resulted in a decrease in afdc participation and an increase in labor force participation among these women the effects were large for ever married women and negligible for never married women

alcohol availability prenatal conditions and long term economic outcomes this study examines how a policy that sharply increased alcohol availability during 8 5 months affected the labor productivity of those exposed to it in utero compared to the surrounding cohorts the prenatally exposed children have substantially worse labor market and educational outcomes and lower cognitive and noncognitive ability effects on earnings are found throughout the distribution but are largest below the median males are more affected than females consistent with growing evidence that boys are less resilient to early environmental insults the long term effects seem primarily driven by changes in prenatal health rather than changes in the childhood environment

capture and the bureaucratic mafia does the revolving door erode bureaucratic integrity does the revolving door phenomenon erode bureaucratic integrity to answer this question we undertake a quantitative case study of a private university in south korea that recruited a former vice minister of education as its president specifically we investigate whether after employing this high ranking former public official the university received favorable treatment from the education ministry in terms of funding estimates from difference in difference triple difference and synthetic control methods all suggest that the high profile public official s recruitment is associated with financial benefits from the official s former employing agency no such advantage however was observed for benefits from other agencies this result offers suggestive but compelling evidence that the revolving door distorts the allocation of government resources the financial benefits the university received are due not to the recruited official s greater competence expertise or knowledge but rather to his implicit collusion with the government

the incidence of medicare abstract the medicare program transfers nearly 300 billion annually from taxpayers to beneficiaries this paper considers the incidence of such transfers in the context of a life cycle model with uncertainty about future health care expenditures we find the distributional consequences of the medicare program are roughly neutral in dollar terms households living in high income neighborhoods pay more in taxes but they also receive more in benefits these dollar flows however ignore the insurance value of the medicare system given the incomplete insurance coverage of lower income elderly households prior to the medicare program the money metric benefits to lower income groups exceed the dollar flows suggesting that medicare redistributes more than a simple accounting exercise would suggest

health insurance without single crossing why healthy people have high coverage standard insurance models predict that people with high risks have high insurance coverage it is empirically documented that people with high income have lower health risks and are better insured we show that income differences between risk types lead to a violation of single crossing in an insurance model where people choose treatment intensity we analyse different market structures and show the following if insurers have market power the violation of single crossing caused by income differences and endogenous treatment choice can explain the empirically observed outcome our results do not rely on differences in risk aversion between types

fast food consumption and the ban on advertising targeting children the quebec experience abstract amid growing concerns about childhood obesity and the associated health risks several countries are considering banning fast food advertising targeting children in this article the authors study the effect of such a ban in the canadian province of quebec using household expenditure survey data from 1984 to 1992 authors examine whether expenditure on fast food is lower in those groups affected by the ban than in those that are not the authors use a triple difference indifference methodology by appropriately defining treatment and control groups and find that the ban s effectiveness is not a result of the decrease in fast food expenditures per week but rather of the decrease in purchase propensity by 13 per week overall the authors estimate that the ban reduced fast food consumption by us 88 million per year the study suggests that advertising bans can be effective provided media markets do not overlap

natural resource economics under the rule of hotelling abstract natural resource stocks held in situ are physical assets equilibrium in the assets market requires that their rates of return be such that their owners are just willing to hold on to them rather than invest elsewhere i discuss a number of factors relating to the evolution of extraction costs to the durability of the resource to market structure and to uncertainty that are important in correctly characterizing the rate of return on holding exhaustible natural resource stocks the emphasis is put on how those factors can potentially help bridge the gap between the basic hotelling s rule of natural resource exploitation and the historical behaviour of the flow price of a number of resources i also highlight some theoretical and empirical issues that need further attention

the employment effects of low wage subsidies abstract low wage subsidies are often proposed as a solution to the unemployment problem among the low skilled but the empirical evidence on their effects is still scarce this paper examines the employment effects of a finnish payroll tax subsidy scheme which is targeted at the employers of older full time low wage workers the system s clear eligibility criteria open up an opportunity for a reliable estimation of the causal impacts of the subsidy scheme our results indicate that the subsidy system had no effect on the employment rate or wages of the eligible groups but it increased slightly working hours among those already at work

output effects of government purchases the theoretical analysis focuses on the distinction between temporary and permanent movements in government purchases under plausible conditions the temporary case involves an output response that is positive less than one to one with the change in government purchases and larger than that generated by an equal sized but permanent shift in purchase the equilibrium real rate of return rise in the temporary case but changes little in the permanent one defense purchases are divided empirically into permanent and temporary components by considering the role of temporary wars no temporary shifts in nondefense purchases were isolated empirical results verify an expansionary output effect for temporary purchases that exceeds that of permanent purchases the results for some other expectational hypotheses are found to be generally supportive of the theory

the elusive wage benefit trade off the case of employer provided health insurance this study shows that standard regressions estimated to measure a trade off between wages and health insurance are misspecified by insufficiently accounting for establishment and firm size an interactive size corrected specification is more likely to reveal a trade off furthermore because insurance decisions are typically made by firms and wages set by establishments the insurance constraint on establishments in multi establishment firms weakens the trade off we use model generated data to show that both factors contribute to the failure in previous research to identify a trade off and data from a cross section of northern californian establishments to test for a trade off in multi establishment and single establishment firms

a note on uncertainty and the hotelling rule abstract in this paper we derive the hotelling rule of optimal natural resource depletion modified to account for uncertainty in rates of return it is shown that in the presence of risk aversion the rule implies that the expected equilibrium rate of increase of net resource price must equal the expected rate of interest if and only if there exists a zero covariance between the marginal utility of consumption and the difference between the rate of net price increase and the rate of interest the sign of this covariance is an empirical question as an example illustrates

who benefits when the government pays more pass through in the medicare advantage program abstract governments contract with private firms to provide a wide range of services while a large body of previous work has estimated the effects of that contracting surprisingly little has investigated how those effects vary with the generosity of the contract in this paper we examine this issue in the medicare advantage ma program through which the federal government contracts with private insurers to coordinate and finance health care for 17 million medicare recipients to do this we exploit a substantial policy induced increase in ma reimbursement in metropolitan areas with a population of 250 000 or more relative to msas below this threshold our results demonstrate that the additional reimbursement leads more private firms to enter this market and to an increase in the share of medicare recipients enrolled in ma plans our findings also reveal that about one eighth of the additional reimbursement is passed through to consumers in the form of better coverage a somewhat larger share accrues to private insurers in the form of higher profits and we find suggestive evidence of a large impact on advertising expenditures our results have implications for a key feature of the affordable care act that will reduce reimbursement to ma plans by 156 billion from 2013 to 2022

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

an individual health plan exchange which employees would benefit and why on average us workers fortunate enough to be offered health insurance through their place of work are given a small number of choices 80 percent of firms accounting for 37 percent of workers offered only one plan in 2005 although there are merits of limited choice including lower administrative costs for sponsoring employers and better pooling of risk within a given employee population substantial consumer surplus is forgone by preventing employees from selecting plans that best suit their needs in dafny ho and varela 2010 we build a model to quantify this deadweight loss using data on plan offerings and enrollment for 800 large us firms in 139 geographic markets over the period 1998 2006 we estimate a model of consumer preferences for characteristics of health plans we use the parameters of that model to predict employee choices under different hypothetical scenarios of expanded choice assuming employers total outlays for health insurance remain constant and plans are made available to new enrollees at large group rates we quantify those gains for each employee group year we observe for example big box retailer s employees in houston in 2003 and conclude these gains are sizable compared to average premiums we estimate that employees would be willing to forgo ten to 40 percent or more of their employer subsidies for the right to apply those subsidies to the plan of their choosing with the exact magnitude depending on the demand specification as well as the definition of the expanded choice set an individual health plan exchange which employees would benefit and why

price dispersion in mortgage markets using transaction level data on canadian mortgage contracts we document an increase in the average discount negotiated off the posted price and in rate dispersion our aim is to identify the beneficiaries of discounting and to test whether dispersion is caused by price discrimination the standard explanation for dispersion in credit markets is risk based pricing our contracts are guaranteed by government backed insurance so risk cannot be the main factor we find that lenders set prices that reflect consumer bargaining leverage not just costs the presence of dispersion implies a lack of competition but our results show this to be consumer specific

environmental and resource economics a canadian retrospective the paper reviews research contributions to environmental and resource economics by scholars in canada we focus mainly on work from the past 25 years but also highlight earlier pathbreaking work we begin by looking at broad trends in research both internationally and within canada we then review canadian contributions to various topics in the field canadians have played a leading role in the development of the field especially in resource economics international environmental economics and the valuation of environmental amenities

futures markets price stabilization and efficient exploitation of exhaustible resources markets for natural resource futures contracts and cash forward contracts experience a rapid growth according to theory this should result in more efficient resource depletion implying that price formation is more consistent with hotelling s rule the rationale of this stabilization effect is briefly discussed next we analyze the impact of expanding futures markets on the behaviour of individual resource owners trading on the cash market using a simple pulse extraction model we demonstrate that the expected time of depletion can shift to the present or the future and that utility of exploitation can go up or down as market prices are stabilized

competition leverage how the demand side affects optimal risk adjustment we study optimal risk adjustment in imperfectly competitive health insurance markets when high risk consumers are less likely to switch insurer than low risk consumers insurers then have an incentive to select even if risk adjustment perfectly corrects for cost differences to achieve first best risk adjustment should overcompensate insurers for serving high risk agents second we identify a trade off between efficiency and consumer welfare reducing the difference in risk adjustment subsidies increases consumer welfare by leveraging competition from the elastic low risk market to the less elastic high risk market third mandatory pooling can increase consumer surplus further at the cost of efficiency

price discrimination and bargaining empirical evidence from medical devices many important issues in business to business markets involve price discrimination and negotiated prices situations where theoretical predictions are ambiguous this paper uses new panel data on buyer supplier transfers and a structural model to empirically analyze bargaining and price discrimination in a medical device market while many phenomena that restrict price discrimination are suggested as ways to decrease hospital costs e g mergers group purchasing organizations and transparency i find that 1 non discriminatory pricing actually works against hospitals because competition is more intense under price discrimination and 2 results depend ultimately on a previously unexplored bargaining effect

the industrial organization of health care markets the u s health care sector is large and growing health care spending in 2011 amounted to 2 7 trillion and 18 percent of gdp approximately half of health care output is allocated via markets in this paper we analyze the industrial organization literature on health care markets focusing on the impact of competition on price quality and treatment decisions for health care providers and health insurers we conclude with a discussion of research opportunities for industrial organization economists including opportunities created by the u s patient protection and affordable care act

wages profits and rent sharing the paper suggests a new test for rent sharing in the u s labor market using an unbalanced panel from the manufacturing sector it shows that a rise in a sector s profitability leads after some years to an increase in the long run level of wages in that sector the paper controls for workers characteristics for industry fixed effects and for unionism lester s range of wages is estimated for rent sharing reasons alone at approximately 24 per cent of the mean wage

dynamic inefficiencies in an employment based health insurance system theory and evidence we investigate the effects of the institutional settings of the us health care system on individuals life cycle medical expenditures health is a form of general human capital labor turnover and labor market frictions prevent an employer employee pair from capturing the entire surplus from investment in an employee s health thus the pair underinvests in health during working years thereby increasing medical expenditures during retirement we provide empirical evidence consistent with the comparative statics predictions of our model using the medical expenditure panel survey meps and the health and retirement study hrs our estimates suggest significant inefficiencies in health investment in the united states

mergers when prices are negotiated evidence from the hospital industry in recent years many hospitals have merged in part to gain bargaining leverage with managed care organizations mcos we investigate the price impact of hospital mergers by formulating and estimating an equilibrium bargaining model between hospital systems and managed care health insurers over prices for inpatient services we estimate the parameters of the model using claims and discharge data from northern virginia in 2006 inova health system proposed to acquire prince william hospital we nd that this merger would have raised prices signicantly and that the remedy of separate bargaining imposed by the ftc in a separate hospital case would have resulted in a larger price increase

concepts and measures of natural resource scarcity with a summary of recent trends a general model of resource scarcity is presented from which previous models can be derived as special cases previous models of scarcity are compared and contrasted refining the concept of scarcity and leading to a resolution of current disputes over the appropriate measure of scarcity an update of the original work done by barnett and morse is summarized leading to reconsideration of their original conclusions it is found that energy and forest products experienced increasing scarcity during the 1970s

the economic consequences of reduced uk military expenditure the last few years have seen a variety of proposals for uk disarmament for a re orientation of defence policy towards a less expensive non nuclear stance more commen surate with britain s present economic position in the world unfortunately these proposals become suddenly coy and tentative as they approach the economic implications of their programme in complete contrast to the detailed quantitative calculations they pro vide for other aspects the alternative defence commission 1983 and prins 1983 are typical examples of this the difficulties this lacuna creates are illustrated by the ordeal the labour party faced in the 1983 election campaign they advocated it appears a reduc tion of british defence expenditure which now accounts for just over 5 of gdp to about the european average of around 3 5 but they proved unable to counter the claim of the conservative defence secretary mr heseltine that this policy would cost 400 000 jobs 1 the hesitancy with which proponents of reductions in military expenditure approach the economic consequences is surprising given the near unanimity in the technical litera ture two major studies in the uk eiu 1963 and brown 1964 studies in the us leontief 1965 and a recent survey kennedy 1983 all indicate that disarmament represents an economic opportunity rather than an economic problem nonetheless the tenor of the recent policy literature suggests that it would be useful to provide a detailed assessment of the economic consequences of a reduction in uk military expenditure from 5 to 3 5 of gdp since the results obtained below are broadly in line with those of the studies cited above the contribution of this paper does not lie in the novelty of its conclusion rather it provides a detailed quantitative review of the economic issues cur rently involved in a transition to lower levels of military expenditure since there is a wide literature already available which provides arguments to suggest that such a transition could provide real security benefits the strategic aspects will only be mentioned in passing d smith 1980 and alternative defence commission 1983 provide detail on this

search frictions and market power in negotiated price markets we provide a framework for empirical analysis of negotiated price markets using mortgage market data and a search and negotiation model we characterize the welfare impact of search frictions and

do private transfers displace the benefits of public transfers evidence from south africa abstract this paper investigates whether government transfer programs displace or crowd out private support focusing on a large increase in state old age pensions in south africa using data spanning the period of the expansion we find that each rand of public pension income to the elderly leads to a 0 25 0 30 rand reduction in private transfers from children living away from home however despite the large increase in income there were no significant changes in migration labor supply or household composition we also show that evaluations of the distributional effects of the pension are overstated when crowding out is ignored

is there job lock evidence from the pre hipaa era we estimate discrete time hazard models of employment duration and standard logarithmic wage equations using the 1987 and 1990 panels of the survey of income and program participation sipp to examine the phenomenon of job lock we test for job lock using differences in differences approaches among those with and without employer provided health insurance and family members with and without health problems we find no statistically significant evidence of job lock on employment duration or wages using this approach we do find some evidence of shorter employment spells for those with employer provided health insurance and spouse provided health insurance and longer employment spells for those with employer provided health insurance and large families others have interpreted these findings as evidence of job lock however the wage equation results using these measures are not consistent with job lock although anecdotal evidence makes it clear that some workers have been locked into less than optimal jobs because of the combination of health problems and employer provided health insurance our results do not suggest that this phenomenon is pervasive in the u s economy

imperfect competition in selection markets policies to correct market power and selection can be misguided when these forces coexist we build a model of symmetric imperfect competition in selection markets that parameterizes the degree of market power and selection we use graphical price theoretic reasoning to characterize the interaction between these forces using a calibrated model of health insurance we show that the risk adjustment commonly used to offset adverse selection can reduce coverage and social surplus conversely in a calibrated model of subprime auto lending realistic levels of competition can generate an oversupply of credit implying that greater market power is desirable

the complementarity between risk adjustment and community rating distorting market outcomes to facilitate redistribution abstract we analyze optimal risk adjustment in competitive health insurance markets when insurers have better information on their customers risk profiles than the sponsor of health insurance in the optimal scheme the sponsor uses reinsurance to screen insurers with bad and good risks in order to lower premiums for enrollees with high expected healthcare costs we then explore the effects of adding a community rating requirement to complement this risk adjustment scheme with community rating insurers have incentives to distort contract generosities to cherry pick low cost consumers however the reduced generosity for low cost types makes screening through reinsurance easier allowing the sponsor to redistribute more when costs for reinsurance are low or the sponsor s bias towards high cost consumers is high community rating dominates risk rating

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

a martingale characterization of the price of a nonrenewable resource with decisions involving uncertainty abstract this paper presents a general model of nonrenewable resource consumption and exploration decisions involving uncertainty about the time of occurrence of an event such as exhaustion stock discovery or a substitute development the resulting price process is characterized in terms of necessary and sufficient conditions under which the price is expected to rise at a rate equal to greater than or less than the discount rate the general model is illustrated and the price process and the optimal decisions are characterized by examining the three types of uncertainty indicated above

the political economy of military expenditure an introduction this paper shows that although the military burden has declined since the korean war in the oecd it still represents an important component of government spending the magnitude of military spending does not provide a measure of its importance to the economy the relation between military spending and accumulation has to be seen as a complex historical dialectical process in which military spending plays a contradictory role the other contributions to the symposium are then discussed within this framework they deal with the empirical analysis of the economic costs of military spending the impact of changing military spending and the problems of conversion copyright 1990 by oxford university press

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

unhealthy insurance markets search frictions and the cost and quality of health insurance we analyze the effect of search frictions in the market for commercial health insurance frictions increase insurance premiums enough to transfer 13 2 percent of consumer surplus from fully insured employer groups to insurers approximately 34 4 billion in 1997 and increase insurance turnover by 64 percent for the average pol icy this rent transfer harms consumers and when combined with heightened turnover reduces incentives to invest in future health we also find that a publicly financed insurance option can improve the efficiency of private insurance markets by reducing search fric tion induced distortions in pricing and marketing efforts jel d83 g22 i18 in the united states health insurance for those under age 65 is typically provided through group plans purchased by employers from commercial insurers health insurance is a complex multi attribute service so employers looking to buy insur ance face a difficult shopping problem savvy purchasers must consider which of the many drugs their employees might use are in the insurer s formularies which local physicians are part of the insurer s provider network and what copays fees and deductibles apply to which pharmaceuticals providers and services comparison shopping is made even more difficult by the fact that many aspects of insurance involve commitments to provide services under hard to anticipate contingencies medical underwriting by insurers and the great profusion of insurance products raises administrative costs and increases the complexity of an employer group s

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

the relation between price and marginal cost in u s industry an examination of data on output and labor input reveals that some u s industries have marginal cost well below price the conclusion rests on the finding that cyclical variations in labor input are small compared with variations in output in booms firms produce substantially more output and sell it for a price that exceeds the costs of the added inputs the paper documents the disparity between price and marginal cost where marginal cost is estimated from annual variations in cost it considers a variety of explanations of the findings that are consistent with competition but none is found to be completely plausible

assessing the effect of payroll taxes on formal employment the case of the 2012 tax reform in colombia in 2013 colombia implemented a tax reform that reduced payroll taxes by a total of 13 5 percentage points of wages this paper evaluates the effects of this component of the 2012 colombian tax reform on firms formal employment and average wages we construct a panel of firms based on their employees administrative records to account for the endogeneity of the treatment we use an instrumental variables technique that exploits the exogenous variation from the decisions of firms that are similar to each other in several dimensions but belong to different economic sectors based on our preferred specification we estimate a positive and significant increase in formal employment as a result of the implementation of the reform of approximately 213 000 jobs in existing pre reform firms in the long run these effects will increase to more than 600 000 jobs the effect of the reform on the average wages paid by firms was also found to be positive for some sizes of firms but the overall effect in the short run is rather small

paying a premium on your premium consolidation in the us health insurance industry we examine whether and to what extent consolidation in the u s health insurance industry is leading to higher employer sponsored insurance premiums we make use of a proprietary panel dataset of employer sponsored healthplans enrolling over 10 million americans annually between 1998 and 2006 to explore the relationship between premium growth and changes in market concentration we exploit the differential impact of a large national merger of two insurance firms across local markets to estimate the causal effect of concentration on market level premiums we estimate real premiums increased by approximately 7 percentage points in a typical market due to the rise in concentration during our study period we also find evidence that consolidation facilitates the exercise of monopsonistic power vis a vis physicians whose absolute employment and relative earnings decline in its wake

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

estimating welfare in insurance markets using variation in prices we provide a graphical illustration of how standard consumer and producer theory can be used to quantify the welfare loss associated with inefficient pricing in insurance markets with selection we then show how this welfare loss can be estimated empirically using identifying variation in the price of insurance such variation together with quantity data allows us to estimate the demand for insurance the same variation together with cost data allows us to estimate how insurers costs vary as market participants endogenously respond to price the slope of this estimated cost curve provides a direct test for both the existence and the nature of selection and the combination of demand and cost curves can be used to estimate welfare we illustrate our approach by applying it to data on employerprovided health insurance from one specific company we detect adverse selection but estimate that the quantitative welfare implications associated with inefficient pricing in our particular application are small in both absolute and relative terms

raising taxes through equalization a simple theory suggests that a common form of federal horizontal equalization grants should cause subnational governments to levy higher tax rates distorting local tax bases and so increasing federal transfers to test this i examine canadian provincial tax policies in the 1972 2002 period consistent with the theory provinces respond to expansions of equalization transfers by increasing their own tax rates i estimate that on average tax rates in grant receiving provinces were substantially and significantly higher as a consequence of the transfer formula jel classification h21 une theorie simple suggere qu une forme usuelle d octrois federaux de perequation horizontale devrait entrainer les gouvernements sub nationaux a imposer de plus hauts taux d imposition modifiant ainsi les bases de fiscalite locale et ce faisant accroissant les transferts federaux pour mettre au test cette hypothese on examine les politiques fiscales des provinces canadiennes pour la periode entre 1972 et 2002 d une maniere qui semble supporter l hypothese les provinces ont repondu a un accroissement des transferts de perequation en accroissant leur propre taux d imposition on estime que les taux moyens d imposition dans les provinces qui recoivent des transferts sont plus eleves de maniere substantielle et significative en raison de la formule de transferts

pricing regulation and imperfect competition on the massachusetts health insurance exchange abstract we analyze insurance pricing regulation under imperfect competition on the massachusetts health insurance exchange differential markups lead to price variation apart from cost variation coarse insurer pricing strategies identify consumer demand younger consumers are twice as price sensitive as older consumers older consumers thus face higher markups over costs modified community rating links prices for consumers differing in both costs and preferences and changes the marginal consumer firms face stricter regulations transfer resources from low cost to high cost consumers reduce firm profits and increase overall consumer surplus

does contracting out increase the efficiency of government programs evidence from medicaid hmos state governments contract with health maintenance organizations hmos to coordinate medical care for nearly 20 million medicaid recipients identifying the causal effect of hmo enrollment on government spending and health care quality is difficult if as is often the case recipients have the option to enroll in a plan to estimate the average effect of hmo enrollment this paper exploits county level mandates introduced during the last several years in the state of california that required most medicaid recipients to enroll in a managed care plan the empirical results demonstrate that the resulting switch from fee for service to managed care was associated with a substantial increase in government spending but no corresponding improvement in infant health outcomes the findings cast doubt on the hypothesis that hmo contracting has reduced the strain on government budgets

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

perfect competition in markets with adverse selection this paper proposes a perfectly competitive model of a market with adverse selection prices are determined by zero profit conditions and the set of traded contracts is determined by free entry crucially for applications contract characteristics are endogenously determined consumers may have multiple dimensions of private information and an equilibrium always exists equilibrium corresponds to the limit of a differentiated products bertrand game we apply the model to establish theoretical results on the equilibrium effects of mandates mandates can increase efficiency but have unintended consequences with adverse selection an insurance mandate reduces the price of low coverage policies which necessarily has indirect effects such as increasing adverse selection on the intensive margin and causing some consumers to purchase less coverage

the craft of labormetrics using a wide array of examples from the literature and from original estimates the author examines the pitfalls that make good empirical research in labor economics at least as much craft as statistical technique among the subjects discussed are the appropriateness and cleanliness of data problems of extreme observations the validity of attempts to produce exogeneity using instrumental variables natural experiments and structural models and the treatment of selectivity and unobservable individual effects the author stresses the importance of testing empirical results to ensure that they make sense and of presenting them clearly and economically

insurer provider networks in the medical care market i use data on the hospital networks offered by managed care health insurers to estimate the expected division of profits between insurers and providers i include a simple profit maximization framework and an additional effect hospitals that can secure demand without contracting with all insurers e g those most attractive to consumers and those that are capacity constrained may demand high prices that some insurers refuse to pay hospital mergers may also affect price bargaining i estimate that all three types of hospitals capture higher markups than other providers these results provide information on the hospital investment incentives generated by bargaining

the dark side of sunshine regulatory oversight and status quo bias abstract as the mortgage foreclosure crisis accelerated in the u s in the late 2000s state level policymakers implemented measures designed to protect consumers and stem the tide of foreclosures one form of policy was simply to require lenders to report on foreclosure prevention activities such policies represented a shift from the status quo for mortgage loan servicing firms operating under incomplete information doing nothing with non paying loans while waiting for more information to be revealed to either foreclosing on the borrower or offering the borrower a modification of loan terms using a difference in difference in differences empirical strategy we exploit one policy implemented in maryland for a subset of mortgage servicers and find evidence that firms perform more loan modifications as well as file more foreclosures increasing foreclosure filings was contrary to the intent of the policy suggesting that policymakers should be aware of how firms exhibit systematic biases much like individuals

do payroll tax breaks stimulate formality evidence from colombia s reform alternative work arrangements have grown rapidly around the world in latin america these alternative work arrangements have long been part of the labor market and have continued to grow the informal sector grew rapidly in latin america over the past few decades comprising up to half of the working population in many countries some attribute the growth in alternative work arrangements and informality to regulations and taxes while others argue that it is precisely the lack of enforcement of regulations that allows unprotected employment arrangements to flourish we examine whether reducing taxes associated with employment stimulates formal sector employment we exploit the fact that the tax reform introduced in colombia in 2012 affected only certain types of workers and not others in particular workers earning less than ten times the minimum wage and self employed workers with more than two employees experienced a reduction of payroll taxes of 13 5 percent between 2013 and 2014 we use the colombian household surveys social security records and the monthly manufacturing sample to conduct difference in differences analyses of the reform we find evidence of increased formal employment for the affected groups after the reform using all three data sets we find that the probability of formal employment and the likelihood of transitioning into registered employment increased for the affected groups after the reform we also find that the level and share of permanent employment relative to temporary employment grew after the reform for those earnings less than ten times the minimum wage the results are greatest for those in smaller firms and for those earnings close to the minimum wage

the impact of a public option in the u s health insurance market we develop a game theoretical framework to examine the implications of the introduction of a nonprofit public option in the u s health insurance market in this model heterogeneous consumers have to choose between two competing insurance plans one plan is offered by a profit maximizing private insurer the other by social welfare maximizing public option in equilibrium the distinct objectives of the two insurers induce adverse selection in consumer choice the public option covers the less healthy consumers yielding the more profitable segment of market to the private insurer however our empirical results suggest that both insurers will capture significant parts of the health insurance market jel i11 l10 l21 l32

how does risk selection respond to risk adjustment new evidence from the medicare advantage program to combat adverse selection governments increasingly base payments to health plans and providers on enrollees scores from risk adjustment formulae in 2004 medicare began to risk adjust capitation payments to private medicare advantage ma plans to reduce selection driven overpayments but because the variance of medical costs increases with the predicted mean incentivizing enrollment of individuals with higher scores can increase the scope for enrolling overpriced individuals with costs significantly below the formula s prediction indeed after risk adjustment ma plans enrolled individuals with higher scores but lower costs conditional on their score we find no evidence that overpayments were on net reduced

trends in natural resource commodity prices an analysis of the time domain abstract this paper attempts to reconcile the theoretical predictions of increasing real prices for nonrenewable natural resource commodities obtained from hotelling style models with the empirical findings of falling prices for these commodities a theoretical model for relative price movements is derived for the case of exogenous technical change and endogenous change in the grade of ores mined the model suggests a u shaped time path for relative prices the implied price movements are tested for all the major metals and fuels and the model parameters are found to be statistically significant for 11 out of the 12 commodities tested

insurer pricing and consumer welfare evidence from medigap this article examines the welfare impact of imperfect competition in the medicare supplement insurance medigap market two firms control nearly three fourths of the medigap market and premiums exceed claims by over 25 i find that a low price elasticity and consumers brand preferences lead firms to engage in substantial marketing and price above cost therefore the strategic behavior of insurers facing relatively inelastic demand is critical in explaining poor market performance i also find that insurers do not capture all of the rents in this market rents also accrue to actors who perform marketing functions including agents and brokers

how do health insurer market concentration and bargaining power with hospitals affect health insurance premiums the us health insurance industry is highly concentrated and health insurance premiums are high and rising rapidly policymakers have focused on the possible link between the two leading to aca provisions to increase insurer competition however while market power may enable insurers to include higher profit margins in their premiums it may also result in stronger bargaining leverage with hospitals to negotiate lower payment rates to partially offset these higher premiums we empirically examine the relationship between employer sponsored fully insured health insurance premiums and the level of concentration in local insurer and hospital markets using the nationally representative 2006 2011 kff hret employer health benefits survey we exploit a unique feature of employer sponsored insurance in which self insured employers purchase only administrative services from managed care organizations to disentangle these different effects on insurer concentration by constructing one concentration measure representing fully insured plans transactions with employers and the other concentration measure representing insurers bargaining with hospitals as expected we find that premiums are indeed higher for plans sold in markets with higher levels of concentration relevant to insurer transactions with employers lower for plans in markets with higher levels of insurer concentration relevant to insurer bargaining with hospitals and higher for plans in markets with higher levels of hospital market concentration

the effect of medicare part d on pharmaceutical prices and utilization prescription drug expenditures represent the most rapidly growing component of health care spending increasing from 5 percent of health care spending in 1980 to more than 10 percent by 2005 centers for medicare and medicaid services cms 2007a further almost 60 percent of all prescriptions in the united states are filled for beneficiaries of medicare medicaid and other government programs rapid innovation in new pharmaceuticals has contributed substantially to quality of life and longevity in the us frank lichtenberg 1996 these facts combined indicate that government procurement schemes are critical both in determining government expenditure on pharmaceuticals and in stimulating innovation of new treatments in this paper we show that the institutions and mechanisms used by the government to pur chase prescription drugs can strongly affect market outcomes by institutions we have in mind large buyer groups structured incentives for patients to consume certain products and the devel opment and use of formularies a formulary is a mechanism that allows a buyer to identify a therapeutically similar treatment as a viable substitute for a patented treatment and to create price competition due to the ability to substitute away from the more expensive product when bargaining with the seller of a patented product the ability to shift demand to a substitute drug is a powerful negotiating tool our paper provides evidence for what we consider a surprising outcome in the case of the new prescription drug program for medicare enrollees moving consumers from cash paying status to membership in an insured group lowers optimal prices for branded prescription drugs below what they otherwise would be this is surprising because the standard effect of insurance is to create inelastic demand and therefore elicit higher prices from a seller with market power duggan and scott morton 2006 however the insurers that we study bundle insurance with a formulary and other mechanisms to create elastic demand an individual consumer typically does not know which drugs are acceptable therapeutic substitutes the consumer s physician typi cally has poor knowledge of prices especially negotiated prices and any one consumer is too small a share of demand to negotiate with a pharmaceutical company a prescription drug plan can potentially surmount all three hurdles our evidence leads us to conclude that the formulary and other mechanisms perform the spe cial role of allowing buyers to move market share among drugs with patent protection thereby raising cross price elasticities and lowering purchase prices or reducing price increases for branded drugs this result contrasts with the common intuition that an uninsured consumer

differentiation and competition in hmo markets this paper examines how differentiation among health maintenance organizations hmos affects local market competition most markets for hmos appear sufficiently unconcentrated however differences among hmos may make competition less intense than the number of competitors would suggest to investigate this possibility we distinguish hmos that serve only local markets from those that operate regional or national networks we analyze how hmos of one type affect the profitability of the other using an equilibrium model of entry and product choice while the two types of hmos have strong competitive effects within segments the competitive effect of differentiated firms is negligible

the changing geography of the military industry in britain lovering j 1991 the changing geography of the military industry in britain reg studies 25 279 293 a number of studies have suggested that defence spending has had a significant impact on the location of industry and the geography of labour markets this paper drawing on a recent study of the employment of research and development professionals in the uk defence industry confirms that defence spending and related employment has been concentrated in the south and west of england it also shows that a number of changes are underway the unusually large british defence industry is restructuring as a result of changes in supply and in demand following the end of the cold war major job losses are in process which may amount to a third of a million jobs in the 1990s this is associated with a spatial reorganization the effect of which is generally to consolidate high level activities in the industry in the south of england and deepen the spatial division of labour a key locational influence in this

a cure for discrimination affirmative action and the case of california s proposition 209 proposition 209 enacted in california in 1996 and made effective the following year ended state affirmative action programs not only in education but also for public employment and government contracting this paper uses cps data and triple difference techniques to take advantage of the natural experiment presented by this change in state law to gauge the labor market impacts of ending affirmative action programs employment among women and minorities dropped sharply a change that was nearly completely explained by a decline in participation rather than by increases in unemployment this decline suggests that either affirmative action programs in california had been inefficient or that they failed to create lasting change in prejudicial attitudes

screening and adverse selection in frictional markets we develop a tractable framework for analyzing adverse selection economies with imperfect competition in our environment uninformed buyers offer a general menu of screening contracts to privately informed sellers some sellers receive offers from multiple buyers while others receive offers from only one buyer as in burdett and judd 1983 this specification allows us to smoothly vary the degree of competition nesting monopsony and perfect competition a la rothschild and stiglitz 1976 as special cases we show that the unique symmetric mixed strategy equilibrium exhibits a strict rank preserving property in that different types of sellers have an identical ranking over the various menus offered in equilibrium these menus can be all separating all pooling or a mixture of both depending on the distribution of types and the degree of competition in the market this calls into question the practice of using the incidence of separating contracts as evidence of adverse selection without controlling for market structure we examine the relationship between exante welfare and the degree of competition and show that in some cases an interior level of frictions maximizes welfare while in other cases competition is unambiguously bad for welfare finally we study the effects of various policy interventions such as disclosure and non discrimination requirements and show that our model generates new and perhaps counter intuitive insights

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