- : Depression and paying for pills or exercise
- : The Case for Infrastructure Spending—Now
- : Does a Carbon Tax Work? Ask British Columbia
Category: Equitablog
Must-read: Richard Mayhew: “Depression and Paying for Pills or Exercise”
Must-Read: : Depression and paying for pills or exercise: “Last night in the Super Tuesday open thread…
…Iowa Old Lady told us about her evening plans:
I go to the gym because it’s supposed to fight my depression, but lately I’ve come to believe that I’m depressed because I have to go and ‘feel better’ part is that I’m so happy it’s over.
This morning I just got out of a meeting with an accountable care organization that is brainstorming on ways to get some of their behavioral health and co-morbidity health and cost risks under better control. The big suggestion from some of the Primary Care Providers (PCP’s) and master level clinicians was getting some of these individuals into personal training classes to do something fun… increased social connectives and increased physical activity… better health, lower pharmacy costs and fewer infrequent but high cost acute events. Their revenue model is a modified capitation model with gain sharing, they can pay for dance classes, weight lifting classes, gym memberships and yoga instructors without having to justify the expense on a claim. There is a long history of research that shows moderate exercise is at least as good as common Selective Serotonin Re-uptake Inhibitors (SSRI’s) in managing depression….
A gym membership with personal trainers and potentially day by day incentives for people to go to the gym may make a lot of medical sense and even more financial sense. However under a fee for service model, reducing pharmacy costs because people were able to step down their SSRI dose or eliminate it entirely was probably a net money loser for the PCP…. The incentives change on risk capitation models as the personal trainer still can not bill the insurer directly, but her salary is paid by the provider office. A personal trainer at $50 to $75 an hour in total costs is far cheaper than a PCP at $180 to $250 per hour…. Things like this is why I am fundamentally optimistic about health care reform in the United States. This is not genius-level work. It is basic work and rejiggering of incentives to avoid being stupid. We have several iterations of being less stupid before we actually have to get too smart.
Must-read: Mark Thoma: “The Case for Infrastructure Spending—Now”
Must-Read: At least as I see it, there is no case against. And yet a lot of people who call themselves “economists” remain silent–or even opposed:
: The Case for Infrastructure Spending—Now: “Suppose your house needs a new roof…
…and the interest rate on the loan you require to get the work done is extraordinarily low — but expected to rise in the future. In addition, construction work has been slow in the area, meaning labor and other costs are at bargain rates for the time being. Should you get the work done now or wait until later when it might cost quite a bit more? That’s the situation the U.S. now faces over infrastructure spending…
Must-read: Eduardo Porter: “Does a Carbon Tax Work? Ask British Columbia”
Must-Read: : Does a Carbon Tax Work? Ask British Columbia: “Ted Cruz says climate change is not happening…
…Donald Trump says he doesn’t believe in it. Marco Rubio, whose hometown, Miami, is projected to be largely underwater within the not too distant future as ice caps shrink and the sea level rises, argues that government efforts to combat it will ‘destroy our economy.’ But those views are not widely shared by conservatives elsewhere around the world. Indeed, not that long ago in a not too distant country, a right-leaning party that shares many of the antitax, pro-business beliefs of Republicans in the United States did exactly what its unbelieving candidates so fear….
In 2008, the British Columbia Liberal Party, which confoundingly leans right, introduced a tax on the carbon emissions of businesses and families, cars and trucks, factories and homes across the province…. Their experience shows that cutting carbon emissions enough to make a difference in preventing global warming remains a difficult challenge. But the most important takeaway for American skeptics is that the policy basically worked as advertised. British Columbia’s economy did not collapse…
Must-reads: March 2, 2016
Must-read: Tim Duy: “Dudley the Dove”
Must Read: : Dudley the Dove: “Bottom Line: The Fed will take a pass on the March meeting…
…Whether the statement is dovish, neutral, hawkish is the key question. Dudley opens up the possibility of a not just a neutral statement, but a dovish one. My sense is that this is shaping up to be a very contentious meeting as participants struggle with the question of exactly which data are they dependent upon.
Why less job searching can be a good thing
Prior to the Great Recession of 2007-2009, eligible unemployed workers in the United States could receive unemployment insurance checks for up to 26 weeks. In the wake of the recession and the massive damage done to the labor market, however, the nation’s unemployment insurance program was extended so that workers could collect up to 99 weeks of benefits. Supporting workers when they can’t find a job makes sense, but some economists and policymakers were concerned that extending the program actually increased the amount of unemployment as workers searched less for a job. While workers on unemployment insurance did search less intensely during the recession, this reduction helped some unemployed workers find jobs.
There’s a wide body of research on the effect of unemployment insurance on the unemployment rate—and the vast majority of this research finds that unemployment insurance actually does increase the unemployment rate a small amount. But it’s important to note how it increases unemployment. By having some cash to allow them to take longer to find a job, workers will continue to show up as unemployed in the calculations of the unemployment rate. If they couldn’t find a job and stopped looking for work, they wouldn’t show up as unemployed according to the technical definition of unemployment. So by keeping workers in the job hunt, the unemployment insurance program pushes up the unemployment rate. It also allows workers to search less intensely and for a longer time, which increases the unemployment rate as well.
Just looking at how this program affects the individual worker’s unemployment status, however, is what economists might call a “partial equilibrium” analysis. In other words, the analysis hasn’t gone the next step to see how the micro-level change for each worker affects the macro level, or “general equilibrium.” Looking at the extension of unemployment insurance benefits in general equilibrium might show that the effect on unemployment is larger or smaller than looking just at the micro level.
A paper by University of Chicago economist Ioana Marinescu looks at just that question. (Here’s a summary of Marinescu’s paper at VoxEU.) Using data from the online job board CareerBuilder.com, Marinescu looks at how the extension of unemployment insurance affected total unemployment. She found that extended benefits reduced the intensity of job searching, measured by the number of job applications, but that the number of job openings posted didn’t change much. The result: less competition for the available jobs, increasing the probability that an unemployed worker could get a job.
The extended unemployment insurance benefits, in essence, tightened the labor market. The program, by inducing some workers to search less, made it seem like there were fewer unemployed workers and made the overall labor market seem more like one during an economic expansion. The macro effect of the extended benefits reduces the impact of the micro effect on the overall unemployment rate. According to Marinescu’s results, a 10 percent increase in the duration of unemployment insurance benefits only increased total unemployment by 0.6 percent. Including the macro effects pushes down the effect of unemployment insurance on unemployment by 40 percent.
While this result is a good reminder to not look at the effect of a program in isolation, it’s also further proof that helping unemployed workers during downturns isn’t just something that feels good—it’s something that has some real economic logic behind it.
School finance reform and the distribution of student achievement
Download File
School-finance-reform Download full working paper
School-finance-reform Download full working paper
Read the full PDF in your browser
Authors:
Julien Lafortune, University of California, Berkeley
Jesse Rothstein, University of California, Berkeley and NBER
Diane Whitmore Schanzenbach, Northwestern University and NBER
Abstract:
We study the impact of post-1990 school finance reforms, during the so-called “adequacy” era, on the distribution of school spending and student achievement between high-income and low-income school districts. Using an event study design, we find that reform events—court orders and legislative reforms—lead to sharp, immediate, and sustained increases in mean school spending and in relative spending in low-income school districts. Using test score data from the National Assessment of Educational Progress, we also find that reforms cause gradual increases in the relative achievement of students in low-income school districts, consistent with the goal of improving educational opportunity for these students. The implied effect of school resources on educational achievement is large.
Inside monopsony: Employer responses to higher labor standards in the full service restaurant industry
Download File
Inside-monopsony Download full working paper
Inside-monopsony Download full working paper
Read the full PDF in your browser
Authors:
T. William Lester, University of North Carolina at Chapel Hill
Abstract:
While efforts to increase the minimum wage have stalled at the Federal level, dozens of cities have passed or are considering local increases that will bring the minimum wage up to $15 per hour. The pace and scale of recent wage increases—spurred on by an organizing drive by fast food workers in the “Fight for $15” movement—leave policy makers and analysts wondering about their eventual impacts. While the impact of publicly mandated labor standards on employment is well studied and remains highly controversial, there are still important missing pieces in our understanding of how locally-enacted labor laws impact the labor market. Although previous research shows that moderate increases in the minimum wage do not result in net job losses and reduces labor turnover in the aggregate, there is still uncertainty as to how higher labor standards may reshape employment practices within firms. Recent studies show support for a model of the labor market that is monopsonistic rather than perfectly competitive using county-level data aggregated for low-wage industries (e.g. restaurants) or groups of workers (e.g. teens). This paper directly examines employer responses to higher labor standards through a qualitative case comparison of the full service restaurant industry across two fundamentally different institutional settings. Research was conducted in San Francisco—where employers face the nation’s highest minimum wage, no tip credits, a pay-or-play health care mandate, and paid sick leave requirements—and in North Carolina’s Research Triangle region—where there are no locally enacted labor standards. Consistent with the monopsonistic model, evidence shows that higher labor standards led to wage compression in San Francisco even while some employers continued to offer greater benefits to reduce turnover. Employers in San Francisco exhibit greater investment in finding better matches and tend to seek higher-skilled, more professional workers, rather than invest in formal in-house training. Finally, higher wage mandates in San Francisco have exacerbated the wage gap between front-of-house and back-of-house occupations—which correlate strongly with existing racial and ethnic divisions. Initial evidence shows that some employers have responded by radically restructuring industry compensation practices by adding service charges and in some cases eliminating tipping.
Pooling multiple case studies using synthetic controls: An application to minimum wage policies
Download File
Synthetic-controls-min-wage Download full working paper
Synthetic-controls-min-wage Download full working paper
Read the full PDF in your browser
Authors:
Arindrajit Dube, University of Massachusetts Amherst
Ben Zipperer, Washington Center for Equitable Growth
Abstract:
We assess the employment and wage effects minimum wage increases between 1979 and 2013 by pooling 29 synthetic control case studies. Using the mean percentile rank, a simple, distribution-free method, we find a sizable, positive and statistically significant effect on the average teen wage. We also test for heterogeneous treatment effects using the distribution of estimated ranks, which has a known form, and detect heterogeneity in the wage elasticities, consistent with differential bites in the policy. In contrast, the employment estimates suggest a small constant effect not distinguishable from zero.