Monday, March 12, 2012

The Monday NBER Papers


Courtemanche and Zapata provide evidence that the Massachusetts health care reform had a strong positive impact on self-reported health outcomes. They show that coverage improves for "men, non-black
minorities, young adults" and low-income people who thus "qualified for the subsidies", but that health outcomes improve for "women, blacks, the near-elderly, and middle-to-upper income individuals. " One important result is that "the estimates imply a 22% reduction in the disparity in self-reported health between blacks and whites."
The results are important as a motivation for the Affordable Care Act, which relies on similar principles as the Massachusetts Act (community rating to prevent discrimination, individual mandate to prevent the subsequent moral hazard issue, subsidies to make the mandate affordable).

Cooper suggests an intermediate solution between staying in, and leaving, a monetary union: "the country which exits retains the use of the common currency but is eliminated from policy determination". For the defaulting country, the stick is the exclusion from monetary policy determination. The advantage is that the contracts in, say, Euro, do not have to be redominated, as they would be if the exiting country had to create a new currency (or return to an old currency). For the countries in the monetary union, the advantage is that by excluding the indebted country from monetary policy determination, they can impose an inflation tax.

Lazear and Spletzer explain the job dynamics in the Great Recession. They explain that most movements in the labor force, in usual times, is due to hiring new workers to substitute for old workers moving to more productive position. This process is known as churn. The authors proceed to define churn as "as the hires and separations that offset each other within a business."  They show that 80% of the reduction in hiring is due to the reduction in churn.
Some interesting and important results:

  • the correlation between the amount of churn in the economy and the unemployment rate is -.96.
  • during the mid 2000s, churn is 65 percent of total hires (which is similar to previous results in the literature since the 1990s)

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