All Medicaid Expansions Are Not Created Equal: The Geography and Targeting of the Affordable Care Act -- by Craig Garthwaite, John A. Graves, Tal Gross, Zeynal Karaca, Victoria R. Marone, Matthew J. Notowidigdo
We use comprehensive patient-level discharge data to study the effect of Medicaid on the use of hospital services. Our analysis relies on cross-state variation in the Affordable Care Act’s Medicaid expansion, along with within-state variation across ZIP Codes in exposure to the expansion. We find that the Medicaid expansion increased Medicaid visits and decreased uninsured visits. The net effect is positive for all visits, suggesting that those who gain coverage through Medicaid consume more hospital services than they would if they remained uninsured. The increase in emergency department visits is largely accounted for by “deferrable” medical conditions. Those who gained coverage under the Medicaid expansion appear to be those who had relatively high need for hospital services, suggesting that the expansion was well targeted. Lastly, we find significant heterogeneity across Medicaid-expansion states in the effects of the expansion, with some states experiencing a large increase in total utilization and other states experiencing little change. Increases in hospital utilization were larger in Medicaid-expansion states that had more residents gaining coverage and lower pre-expansion levels of hospital uncompensated care costs.
Job Loss, Credit and Crime in Colombia -- by Gaurav Khanna, Carlos Medina, Anant Nyshadham, Christian Posso, Jorge A. Tamayo
We investigate the effects of job displacement, as a result of mass-layoffs, on criminal arrests using a novel matched employer-employee-crime dataset in Medellín, Colombia. Job displacement leads to immediate earnings losses, and an increased likelihood of being arrested for both the displaced worker and for other youth in the family. We leverage variation in opportunities for legitimate reemployment and access to consumption credit to investigate the mechanisms underlying this job loss-crime relationship. Workers in booming sectors with more opportunities for legitimate reemployment exhibit smaller increases in arrests after job losses. Greater exposure to expansions in consumption credit also lowers the job loss-crime elasticity.
Tax Policy and Lumpy Investment Behavior: Evidence from China's VAT Reform -- by Zhao Chen, Xian Jiang, Zhikuo Liu, Juan Carlos Suárez Serrato, Daniel Xu
A universal fact of firm-level data is that investment is lumpy: firms either replace a considerable fraction of their existing capital (spike) or do not invest at all (inaction). This paper incorporates the lumpy nature of investment into the study of how tax policy affects investment behavior. We show that tax policy can directly impact the lumpiness of investment and that the effectiveness of tax incentives in stimulating investment depends crucially on interactions with investment frictions. We illustrate these results by studying one of the largest tax incentives for investment in recent history: China's 2009 VAT reform. Using administrative tax data and a difference-in-differences design, we document that the reform increased investment by 36% and that this effect is driven by additional investment spikes. We then simulate the fiscal cost of stimulating investment through different tax policies using a dynamic investment model that is consistent with the reduced-form effects of the reform. Policies that directly reduce the likelihood of firm inaction (e.g., investment tax credits) are more effective at stimulating investment than policies that only reduce the tax cost of investment (e.g., corporate income tax cuts).
History Dependence, Cohort Attachment, and Job Referrals in Networks of Close Relationships -- by Ayal Y. Chen-Zion, James E. Rauch
We model network formation in a firm. Agents learn about the quality of their working relationships with each other. Their good relationships become their networks. Accumulating relationships becomes increasingly costly, however. Over time agents become less open to forming relationships with others unknown to them, leading their networks to be front-loaded with agents they met near the beginning of their careers. The interaction of this dynamic with turnover yields predictions about the time pattern of history dependence in an agent’s network as a function of his tenure. Mutual openness of newly arrived agents in a firm also leads to the cross-section prediction of “cohort attachment,” a tendency for members of an agent’s hiring cohort to be disproportionately represented in his network. When members of a network formed within a firm are subsequently split across many firms, the desire to renew their successful working relationships can lead to job referrals. Former co-workers who provide referrals will be drawn disproportionately from the referred workers’ hiring cohorts at their previous employers.
Exploring The Role of Limited Commitment Constraints in Argentina’s "Missing Capital" -- by Marek Kapička, Finn Kydland, Carlos Zarazaga
We study why capital accumulation in Argentina was slow in the 1990s and 2000s, despite high productivity growth and low international interest rates. We show that limited commitment constraints introduce two mechanisms. First, the response of investment to a total factor productivity increase is muted and short-lived, while the response to a decrease is large and persistent. Second, unlike in a first-best economy, low international interest rates may reduce capital accumulation, because they increase the relevance of future commitment constraints. A quantitative implementation of the model economy shows that the two mechanisms are quantitatively important for the dynamics of Argentina’s capital accumulation. The model accounts for between 50% and 85% of the capital missing from Argentina in these two periods, relative to what it would be in the absence of the limited commitment frictions.
Can Diffuse Delivery System Reforms Improve Population Health? A Study of the State Innovation Models Initiative -- by Partha Deb, Anjelica Gangaram, Hoda Khajavi
We examine the effects of the State Innovation Models (SIM) on population-level health status. The SIM initiative provided $250 million to six states in 2013 for delivery system reforms. We use data from the Behavioral Risk Factor Surveillance System for the years 2010 -- 2016 to compare health of the populations in 6 SIM states to 15 states that were not involved in any aspects of SIM. We examine changes in health using an event study design. We develop a Latent Class Profile model that takes multiple measures of latent health into a common, latent health status to study the effect of the intervention. Such models can yield informative estimates where separate estimation of measures do not. We find that individuals in states that implemented SIM saw significant improvements in health across a number policy-relevant subpopulations.
A Growing share of Emerging Markets (EMs) use hybrid versions of inflation targeting (IT) that differ from the IT regimes of OECD countries. Policy interest rates among commodity countries are impacted by real exchange rate and international reserves (IR) changes, aiming at stabilizing their real exchange rate in the presence of volatile terms of trade and heightened exposure to capital inflow/outflow shocks. IT works well with independent central banks; yet, fiscal dominance concerns may hinder the efficacy and independency of central banks. This suggests experimenting with the integration of monetary rules with fiscal rules, possibly linking these rules with the operations of buffers like IR and Sovereign Wealth Funds (SWFs). The Global Financial Crisis validated the benefits of counter-cyclical management of international reserves and SWFs in reducing the volatility of real exchange rates. Macro-prudential policies may complement or even substitute buffer policies by reducing a country’s balance sheet exposure to foreign currency debt, mitigating the risk of costly sudden-stops and capital flight. A growing share of EMs is exposed to new financial technologies (fintech), providing cheaper and faster financial services, deepening financial coverage to previously under-served populations. Deeper fintech diffusion may redirect financial intermediation from regulated banks to emerging fintech shadow banks, some of which may have global reach. These developments, and the diffusion of cryptocurrencies promising anonymized payment systems may hinder the effectiveness of monetary policy, and eventually induce greater financial instability. States may encourage the diffusion of efficient financial intermediation in ways that benefit users, while restricting the use of anonymized exchange and global monies to reduce the threat of a shrinking tax base, and to maintain financial stability.
Undue Burden Beyond Texas: An Analysis of Abortion Clinic Closures, Births, And Abortions in Wisconsin -- by Joanna Venator, Jason Fletcher
In this paper, we estimate the impacts of abortion clinic closures on access to clinics in terms of distance and congestion, abortion rates, and birth rates. Legislation regulating abortion providers enacted in Wisconsin in 2011-2013 ultimately led to the closure of two of five abortion clinics in Wisconsin, increasing the average distance to the nearest clinic to 55 miles and distance to some counties to over 100 miles. We use a difference-in-differences design to estimate the effect of change in distance to the nearest clinic on birth and abortion rates, using within-county variation across time in distance to identify the effect. We find that a hundred-mile increase in distance to the nearest clinic is associated with 25 percent fewer abortions and 4 percent more births. We see no significant effect of increased congestion at remaining clinics on abortion rates. We find significant racial disparities in who is most affected by abortion clinic closures, with increases in distance increasing birth rates significantly more for Black, Asian, and Hispanic women. Our results suggest that even small numbers of clinic closures can result in significant restrictions to abortion access of similar magnitude to those seen in Texas when a greater number of clinics closed their doors.
What Difference Does a Diagnosis Make? Evidence from Marginal Patients -- by Mattan Alalouf, Sarah Miller, Laura R. Wherry
Over the past 30 years, the criteria used to diagnose many illnesses have been relaxed, resulting in millions more relatively healthy individuals receiving treatment. This paper explores the impact of receiving a diagnosis of a common disease among such “marginally ill” patients. We apply a regression discontinuity design to the cutoff in blood sugar levels used to classify patients as having diabetes. We find that a marginally diagnosed patient with diabetes spends $1,097 more on drugs and diabetes-related care annually after diagnosis, but find no corresponding changes in self-reported health or healthy behaviors. These increases in spending persist over the 6-year period we observe the patients. These marginally diagnosed patients experience improved blood sugar after the first year of diagnosis, but this improvement does not persist in subsequent years. Other clinical measures of health, such as BMI, blood pressure, cholesterol, and mortality show no improvement. The diagnosis rates for preventable disease-related conditions such as diabetic retinopathy, neuropathy, and kidney disease increase following a diagnosis, likely due to more intensive screening. Our results imply that a small relaxation in the diagnosis cutoff would increase total spending on diabetes-related care by about $2.4 billion annually and minimally impact patient health.
Marriage Equality Laws and Youth Suicidal Behaviors -- by D. Mark Anderson, Kyutaro Matsuzawa, Joseph J. Sabia
Since the landmark ruling in Goodridge v. Department of Public Health in 2004, the legalization of same-sex marriage (SSM) has proliferated throughout the United States via either legislative action or court order. Advocates of SSM laws argue that marriage equality will generate important health benefits not only for adult same-sex couples, but also for LGBQ-identifying youths. Using data from the State Youth Risk Behavior Surveys, we explore the relationship between marriage equality and suicidal behaviors among LGBQ-identifying youths. Despite previous research suggesting otherwise, we find little evidence that SSM laws have reduced suicide attempts among teen sexual minorities, nor have they decreased the likelihood of suicide planning, suicide ideation, or depression. Instead, we find some evidence that SSM legalization via judicial mandate is associated with worse mental health for these individuals, consistent with a story of social backlash.
We link detailed data on defense spending, wages, hours, employment, establishments, and GDP across U.S. cities to study the effects of fiscal stimulus. Our small-open-economy empirical setting permits us to estimate key macroeconomic outcomes and elasticities, including the responses of the labor share and the labor wedge to demand shocks and the elasticity of output with respect to labor inputs. We also decompose changes in work hours into different margins (hours per worker, the employment rate, and the labor force) and examine effects on local rental prices, wages, and firm entry. We compare our findings with the predictions of macroeconomic models and propose modifications to existing theory that can accommodate our findings.
Commerce requires trust, but trust is difficult when one group consistently fears expropriation by another. If men have a comparative advantage at violence and there is little rule-of-law, then unequal bargaining power can lead women to segregate into low-return industries and avoid entrepreneurship altogether. In this paper, we present a model of female entrepreneurship and rule of law that predicts that women will only start businesses when they have both formal legal protection and informal bargaining power. The model's predictions are supported both in cross-national data and with a new census of Zambian manufacturers. In Zambia, female entrepreneurs collaborate less, learn less from fellow entrepreneurs, earn less and segregate into industries with more women, but gender differences are ameliorated when women have access to adjudicating institutions, such as Lusaka's “Market Chiefs” who are empowered to adjudicate small commercial disputes. We experimentally induce variation in local institutional quality in an adapted trust game, and find that this also reduces the gender gap in trust and economic activity.