THE EFFECT OF INSURANCE COVERAGE ON PREVENTIVE CARE

Despite the growth in health insurance products that differentially cover preventive care and nonpreventive care, little is known about how preventive care utilization responds to targeted changes in coverage. Using administrative data from a large company, this paper examines the implementation of an insurance benefit design which differentially increased the price of nonpreventive care while decreasing the price of prevention. Leveraging a difference‐in‐differences research strategy, we find that preventive care utilization did not increase and even declined due to the differential price change. This evidence indicates a meaningful negative cross‐price effect, suggesting that nonpreventive care and preventive care are complements. (JEL I13, I11)     

NEW EVIDENCE ON THE RETIREMENT AND DEPRECIATION OF MACHINE TOOLS

This paper uses data from machinery dealers to estimate the retirement and depreciation patterns for a broad set of conventional machine tools. According to the dealers, the average service life of these machines at the survey date was about thirty years. Service lives were even longer in the mid-1970s, with the reduction over time likely caused by the diffusion of superior, computer controlled machines. Consistent with the relatively long average life, the conventional machines have depreciated slowly. I use the results to assess the average service life assumed by the Bureau of Economic Analysis to construct capital stocks for metalworking machinery.     

THE EFFECT OF INCENTIVE‐INDUCED RETIREMENT ON SPOUSAL RETIREMENT RATES: EVIDENCE FROM A NATURAL EXPERIMENT

We identify, quantify, and explain the impact of incentive‐induced early retirement (ER) of husbands on their wives' probability to retire within 1 year, using administrative data from the Netherlands. Our identification strategy is based on a policy intervention by which targeted individuals working at the central government level became unexpectedly and temporarily eligible for very generous ER benefits. This retirement window of opportunity implied for interested workers that transitions from the current job into full retirement had to be effected swiftly and irreversibly. We find that induced ER of husbands increased their wives' probability to retire by 10 percentage points. This is a strong and robust local average treatment effect. Partly, the effect runs through wives at ages when they may have been eligible for ER programs themselves. (JEL C26, J26, J120, J140)     

HEALTH CARE, INSURANCE, AND THE CONTRACT CHOICE EFFECT

This article explores the interdependence between the individual consumer's demand for medical care and choice of health insurance coverage, with emphasis on its implications for demand behavior and empirical analysis. We show that an increase in the price of medical care has two effects on demand, the usual response of reduced quantity demanded and a health insurance contract choice effect resulting from the consumer's incentive to change insurance plan. The contract choice effect, widely neglected in studies of medical care demand, alters both the quantitative and qualitative predictive properties of the consumer's demand for medical services. (JEL D11, D81, I11 )     

THE EFFECT OF INSTITUTIONAL EXPENDITURES ON EMPLOYMENT OUTCOMES AND EARNINGS

In recent decades, public attention on colleges has risen in response to rising college expenditures and costs. This study uses the Education Longitudinal Study of 2002 to investigate how spending impacts salaries and employment outcomes, controlling for selection. Our findings indicate that spending on instruction increases salaries, the probability of full‐time employment, and job match, particularly for more disadvantaged students, while there are smaller benefits of spending on student services for less disadvantaged students. Spending on research has large positive impacts on salary and the probability of full‐time employment, especially for disadvantaged students. (JEL I20, J24)     

EXAMINING THE EXTERNALITY OF UNEMPLOYMENT INSURANCE ON CHILDREN'S EDUCATIONAL ACHIEVEMENT

I exploit differences in the generosity of unemployment insurance (UI) benefits across states and over time to investigate the link between UI and children's academic achievement. Estimates show that a 1% increase in maximum weekly UI benefits reduces the probability that a child repeats a grade by around 0.03 percentage points. The effect is concentrated among children of low‐ and middle‐income families. This paper's findings, which are the first in the literature to show evidence of a positive effect of UI on children's educational outcomes, provide insight into the role of UI in the human capital accumulation of children. (JEL I20, I38, J65)     

THE ROLE OF INFORMATION ON RETIREMENT PLANNING: EVIDENCE FROM A FIELD STUDY

Many households neglect the pivotal task of planning for retirement. Proposals to stimulate employees to save for retirement in the workplace include tax subsidies, which are costly, and using automatic defaults, which may not complement the heterogeneous preferences of savers. This randomized field study shows that an information‐based intervention increases reported retirement plan participation, emergency savings, and using a budget. Employees offered access to education increased actual retirement deferrals by $26 per month. These results suggest that retirement education programs may be an effective strategy to increase retirement planning and saving behavior. (JEL J26, D14, D91)     

THE EFFECT OF UNIT FEES ON THE CONSUMPTION OF QUALITY

A law-of-demand explanation to the Alchian-Allen, or "shipping the good apples out," proposition rests on a change in the relative price of quality when a unit fee is introduced. However, the manner in which quality is consumed is crucial. In some cases, for instance, there is no substitution between the quality attribute and the priced, quantity-measured attribute. This paper shows that in these cases the relative price of quality is unchanged by a unit fee. Nevertheless, while the "unit fee" proposition fails to obtain for individual choice, it does hold in aggregate.     

DIFFERENTIAL DEPOSIT GUARANTEES AND THE EFFECT OF MONETARY POLICY ON BANK LENDING

This paper utilizes differences in de jure deposit insurance coverage across banks and changes in coverage over time to identify a bank‐lending channel in Poland. Banks with partial guarantees have a stronger loan response to monetary policy than banks with full guarantees. Furthermore, the weak response of the fully guaranteed banks is attributed to their ability to raise low‐reserve, uninsured time deposits relative to the partially covered banks. When differential coverage is eliminated, there is no disparity in the loan response between the two groups. This lending channel has implications for credit control and financial system development in emerging markets. (JEL E52, G21, G28)     

THE EFFECT OF FISCAL POLICY ON THE SHORT-RUN RELATION BETWEEN NOMINAL INTEREST RATES AND INFLATION

This paper presents a simple empirical model of the relation between the inflation rate and the nominal interest rate. We show that previous results found in the literature may be attributed to specification error and that there are natural explanations for the observed signs of previous Fisher equation estimates. Our results show that fiscal policy shocks may generate short run negative correlations between changes in inflation and changes in the nominal interest rates. These results illustrate the difficulty in discussing the relation between inflation and nominal interest rates without conditioning the analysis with specific assumptions on the course of the economy.     

THE EFFECT OF SELECTIVE INS MONITORING STRATEGIES ON THE INDUSTRIAL EMPLOYMENT CHOICE AND EARNINGS OF RECENT IMMIGRANTS

One effect of 1986's immigration reform was to make INS inspection of firms more costly relative to other industries. In response, we suggest, the INS refocused its enforcement efforts toward industries with a higher concentration of illegals per establishment, especially manufacturing. We test this hypotheses and model the effects of a selective monitoring strategy on the employment choice and wages of illegal workers. We find evidence of selective monitoring by the INS and that this policy has redistributed illegal workers from closely to weakly monitored industries. Specifically, we find a shift from the higher-paying manufacturing sector to the agricultural.     

THE EFFECT OF MONETARY INCENTIVES AND FOLLOW-UP MAILINGS ON THE RESPONSE RATE AND RESPONSE QUALITY IN MAIL SURVEYS

The joint and comparative effects of the use of monetary incentivesand follow-up mailings were examined in a mail survey of suburbanWashington, DC cable television subscribers. Four experimentalgroups received monetary incentives enclosed with the firstmailing only ($0.25, $0.50, $1.00, or $2.00) and three follow-upmailings. These groups were compared with each other and againsta control group that did not receive an incentive. The resultsindicated that the response rate from the first mailing increasedsignificantly as the incentive amount increased from zero to$0.25, and from $0.25 to $1.00. Four mailings without an incentiveproduced a higher response rate than a single mailing with anincentive, but a combination of follow-up mailings and a $1.00or $2.00 incentive produced a significantly higher responserate than an equivalent number of mailings without an incentive. There was some evidence of intertreatment response bias. Largermonetary incentives tended to produce: (1) a greater degreeof effort expended in completing the questionnaires, as measuredby the number of short answers and comments provided, and thenumber of words written, and (2) comments that were more favorabletoward the survey sponsor.     

THE ROLE OF FINANCIAL LITERACY IN DETERMINING RETIREMENT PLANS

Workers nearing retirement face many important, and often irreversible, choices. We collected detailed demographic and financial literacy data on over 1,500 workers nearing retirement at three large companies to assess how individuals are planning for retirement. Many respondents display limited knowledge and understanding of public and company‐provided retirement benefits. Controlling for basic demographics and wealth, we find that misconceptions about eligibility ages and plan generosity influence workers' expected age of retirement. Although retirement‐related decisions will affect workers' well‐being for the remainder of their lifetimes, many do not possess enough basic financial knowledge to confidently make optimal choices. (JEL J26, J320, J240)