This paper discusses non-employment margins through which firms may respond to minimum wage increases. Margins of interest include evasion, output prices, noncash compensation, job attributes ...including effort requirements, the firm's mix of low- and high-skilled labor, and the firm's mix of labor and capital. I discuss the basic theory behind each margin's potential importance as well as findings from empirical research on their real-world relevance. Additionally, I present a set of pedagogical diagrams that show how supply and demand analyses of labor markets can be extended to bring additional nuances of real-world markets into the classroom.
We estimate the minimum wage's effects on low-skilled individuals' employment and income trajectories following the Great Recession. Our approach exploits two dimensions of the data we analyze. ...First, we compare individuals in states that were fully bound by the 2007 to 2009 increases in the federal minimum wage to individuals in states that were not. Second, we use variation in the minimum wage's bite across skill groups to separate our samples into “target” and “within-state control” groups. Using the 2008 panel of the Survey of Income and Program Participation, we find that binding minimum wage increases had significant, negative effects on the employment and income growth of targeted workers. Although there are important limitations to our research designs, our estimates are robust to adopting a range of alternative strategies to construct our analysis samples and to account for variation in the Great Recession's underlying severity across states. In aggregate, our estimates suggest that this period's minimum wage increases reduced aggregate employment rates by at least half of a percentage point in states that were bound by the federal minimum wage increases. Because our estimates are large relative to what one would infer from past research, we emphasize the relevance of the historical episode we analyze.
•The federal minimum wage rose from $5.15 to $7.25 during the Great Recession.•These increases in the federal minimum wage were differentially binding across states.•We find that employment among low-skilled individuals declined more in fully bound states than in other states.•Our estimates are robust to a range of approaches to controlling for variations in the recession’s underlying severity.•Because we analyze longitudinal data, we can investigate the income growth of targeted individuals.•We find that targeted individuals experienced reductions in income growth and economic mobility.•We emphasize that the context of the Great Recession is central for interpreting our empirical findings.
We investigate whether physicians' financial incentives influence health care supply, technology diffusion, and resulting patient outcomes. In 1997, Medicare consolidated the geographic regions ...across which it adjusts physician payments, generating area-specific price shocks. Areas with higher payment shocks experience significant increases in health care supply. On average, a 2 percent increase in payment rates leads to a 3 percent increase in care provision. Elective procedures such as cataract surgery respond much more strongly than less discretionary services. Non-radiologists expand their provision of MRIs, suggesting effects on technology adoption. We estimate economically small health impacts, albeit with limited precision.
We assess the COVID-19 pandemic’s implications for state government sales and income tax revenues. We estimate that the economic declines implied by recent forecasts from the Congressional Budget ...Office will lead to a shortfall of roughly $106 billion in states’ sales and income tax revenues for the third quarter of 2020 through the second quarter of 2021 (the 2021 fiscal year for most states). This is equivalent to 0.5 percent of gross domestic product and 11.5 percent of our pre-COVID sales and income tax projection. Additional tax shortfalls from the second quarter of 2020 (the final quarter of most states’ 2020 fiscal years) may amount to roughly $42 billion. We discuss how these revenue declines fit into several pieces of the broader economic context. These include other revenues (e.g., university tuition and fees) that are also at risk, as well as spending needs necessitated by the public health crisis itself. Further dimensions of context involve fiscal support enacted through several pieces of federal legislation.
In the Shadow of a Giant Clemens, Jeffrey; Gottlieb, Joshua D.
The Journal of political economy,
02/2017, Letnik:
125, Številka:
1
Journal Article
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We analyze Medicare’s influence on private insurers’ payments for physicians’ services. Using a large administrative change in reimbursements for surgical versus medical care, we find that private ...prices follow Medicare’s lead. A $1.00 increase in Medicare’s fees increases corresponding private prices by $1.16. A second set of Medicare fee changes, which generates area-specific payment shocks, has a similar effect on private reimbursements. Medicare’s influence is strongest in areas with concentrated insurers and competitive physician markets, consistent with insurer-doctor bargaining. By echoing Medicare’s pricing changes, these payment spillovers amplify Medicare’s impact on specialty choice and other welfare-relevant aspects of physician practices.
Balanced budget requirements lead to substantial pro-cyclicality in state government spending, with the stringency of a state's rules driving the pace at which it must adjust to shocks. We show that ...fiscal institutions can generate natural experiments in deficit-financed spending that are informative regarding fiscal stabilization policy. Alternative sources of variation in subnational fiscal policy often implicitly involve "windfall" financing, which precludes any effect of future debt or taxation on current consumption and investment. Consistent with a role for these "Ricardian" effects, our estimates are smaller than those in related studies, implying an on-impact multiplier below 1.
•We provide evidence of substantial small-state and partisan biases in federal support for state and local governments during the COVID-19 pandemic.•An additional Senator or Representative per ...million residents predicts an additional 670 dollars in aid per capita across the four relief packages.•Alignment with the Democratic party predicts increases in states’ allocations through legislation designed after the January 2021 political transition.•This benefit of alignment with a unified federal government operates through the American Rescue Plan Act’s size and through the formulas it used to distribute transportation and general relief funds.
COVID-19 relief legislation offers a unique setting to study how political representation shapes the distribution of federal assistance to state and local governments. We provide evidence of a substantial small-state bias: an additional Senator or Representative per million residents predicts an additional 670 dollars in aid per capita across the four relief packages. Alignment with the Democratic party predicts increases in states’ allocations through legislation designed after the January 2021 political transition. This benefit of alignment with a unified federal government operates through the American Rescue Plan Act’s size and through the formulas it used to distribute transportation and general relief funds.
Abstract
We show that the demand shocks associated with the U.S. Civil War and World War I led to substantial increases in prosthetic device patenting (relative to patenting in other medical and ...mechanical technology classes). Through analyses of patent texts, we find that the Civil War led inventors to focus on production process improvements, while World War I did not. Further, we find that inventors emphasized dimensions of product quality that aligned with differences in buyers' preferences across wars. Alongside evidence from the historical record, these findings imply that procurement environments can significantly shape the scientific problems with which inventors engage.
I develop and analyze a set of cross-country facts regarding employment and wage setting institutions over the decade surrounding the 2008 financial crisis. Among long-industrialized countries, young ...adult employment declined more than prime age employment over this time period. I show that differences in countries' wage setting institutions strongly predict variations in the magnitude of declines in young adult employment. Both unconditionally and conditional on changes in macroeconomic conditions, young adult employment declined 5 percentage points less in countries where wage setting is driven by collective bargaining arrangements than in countries with statutory wage floors. Evidence on the evolution of legislated minimum wage rates and of an asymmetry in the relationship between growth and young adult employment suggest an important role for a standard "wage rigidity" mechanism.
Abstract
Interactions between redistributive policies can confront low‐income households with complicated choices. We study one such interaction, namely the relationship between Medicaid eligibility ...thresholds and the minimum wage. A minimum wage increase reduces the number of hours a low‐skilled individual can work while retaining Medicaid eligibility. We show that the empirical and welfare implications of this interaction can depend crucially on the relevance of labor market frictions. Absent frictions, affected workers may maintain Medicaid eligibility through small reductions in hours of work. With frictions, affected workers may lose Medicaid eligibility unless they leave their initial job. Empirically, we find that workers facing this scenario became less likely to participate in Medicaid, less likely to work, and more likely to spend time looking for new jobs, including search while employed. The observed outcomes suggest that low‐skilled workers face substantial labor market frictions. Because adjustment is costly, tinkering with safety net program parameters that determine the location of program eligibility notches can be harmful to beneficiaries.
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