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Juergen Jung

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Papers by Juergen Jung

Healthcare Reform and Gender Specific Child Investment in Developing Countries

SSRN Electronic Journal, 2020

We estimate to what extent a large scale health care reform disproportionately affects the mortal... more We estimate to what extent a large scale health care reform disproportionately affects the mortality rate of boys in the context of a developing country with cultural preferences favoring boys. We use arguably exogenous variations due to a health care reform-the National Health Policy-which was implemented in Nepal in 1991 along with data from the Nepal Living Standard Survey 1996 and estimate that improved quality of primary health care facilities (by one standard deviation) reduces the mortality rate of infant boys by 3.3 percentage points but does not affect the mortality rate of infant girls. We then construct a new cost measure for access to care in newly provisioned hospitals and find that higher access costs (by one standard deviation) increase the mortality rate of infant boys by 4 percentage points after the reform but, again, do not affect the mortality rate of girls. Our analysis points to societal gender preferences for sons and the consequent neglect of daughters' health as potential drivers of some of the observed differences in mortality between genders. Our research highlights the important role of cultural norms in shaping the outcomes of large scale health care reforms.

Health Risk and the Welfare Effects of Social Security

SSRN Electronic Journal, 2020

We quantify the importance of idiosyncratic health risk in a calibrated general-equilibrium model... more We quantify the importance of idiosyncratic health risk in a calibrated general-equilibrium model of Social Security. We construct an overlapping-generations model with rational-expectations households, idiosyncratic labor income and health risk, profit-maximizing firms, incomplete insurance markets, and a government that provides pensions and health insurance. We calibrate this model to the U.S. economy and perform two sets of computational experiments: (i) we decrease the size of Social Security, and (ii) we modify the progressivity of Social Security's benefit-earnings rule. We find that cutting Social Security's payroll tax in general equilibrium increases overall welfare, but by a lesser extent when health risk is present. When we modify the progressivity of Social Security's benefit-earnings rule, we find that a lump-sum benefit unrelated to past income increases overall welfare, but by a larger extent in the presence of health risk. A linear (fully proportional) benefit-earnings rule, on the other hand, reduces overall welfare, but also by a larger extent in the presence of health risk. Together, our results suggest that Social Security's implicit insurance is more valuable for low-and medium-income households when health risk is present in the model environment.

Coronavirus Infections and Deaths by Poverty Status: Time Trends and Patterns

SSRN Electronic Journal, 2020

We study the spread of COVID-19 infections and deaths by county poverty level in the US. In the b... more We study the spread of COVID-19 infections and deaths by county poverty level in the US. In the beginning of the pandemic, counties with either very low poverty levels or very high poverty levels reported the highest numbers of cases. A U-shaped relationship prevails for counties with high population density while among counties with low population density, only poorer counties report high incidence rates of COVID-19. Second, we discuss the pattern of infections spreading from higher to lower income counties. Third, we show that stay-at-home mandates caused significantly higher reductions in mobility in high income counties that experienced adverse weather shocks than counties that did not. These effects are not present in counties with high poverty rates. Using weather shocks in combination with stay-at-home mandates as an instrument for social distancing, we find that measures taken to promote social distancing helped curb infections in high income counties but not in low income counties. These results have important policy implications for containing the spread of infectious diseases in the future.

Aging and Health Financing in the U.S. - A General Equilibrium Analysis

SSRN Electronic Journal, 2006

We quantify the effects of population aging on the US healthcare system. Our analysis is based on... more We quantify the effects of population aging on the US healthcare system. Our analysis is based on a stochastic general equilibrium overlapping generations model of endogenous health accumulation calibrated to match pre-2010 U.S. data. We find that population aging not only leads to large increases in medical spending but also a large shift in the relative size of public vs. private insurance. Without the Affordable Care Act (ACA), aging itself leads to a 36.6 percent increase in health expenditures by 2060 and a 5 percent increase in GDP which is driven by the expansion of the healthcare sector. The group-based health insurance (GHI) market shrinks, while the individual-based health insurance (IHI) market and Medicaid expand significantly. Additional funds equivalent to roughly 4 percent of GDP are required to finance Medicare in 2060 as the elderly dependency ratio increases. The introduction of the ACA increases the fraction of insured workers to 99 percent by 2060, compared to 81 percent without the ACA. This additional increase is mainly driven by the further expansion of Medicaid and the IHI market and the stabilization of the GHI market. Interestingly, the ACA reduces aggregate health care spending by enrolling uninsured workers into Medicaid which pays lower prices for medical services. Overall, the ACA adds to the fiscal cost of population aging mainly via the Medicare and Medicaid expansion.

Optimal Progressive Income Taxation in a Bewley-Grossman Framework

SSRN Electronic Journal, 2017

We study optimal income tax progressivity in an environment where individuals are exposed to idio... more We study optimal income tax progressivity in an environment where individuals are exposed to idiosyncratic income and health risks over the lifecycle. Our results, based on a calibration for the US economy, indicate that the presence of health risk combined with incomplete insurance markets amplies the social insurance role of progressive income taxes. The government is required to set higher optimal levels of tax progressivity in order to provide more social insurance for unhealthy low income individuals who have limited access to health insurance. The optimal progressive income tax system includes a tax break for income below $36, 400 and high marginal tax rates of over 50 percent for income above $200, 000. The tax progressivity (Suits) indexa Gini coecient for income tax contributions by incomeof the optimal tax system is around 0.53, compared to 0.17 in the benchmark tax system. Yet, the optimal tax system in our model is more progressive than the optimal tax systems in models abstracting from health risk (e.g., Conesa and Krueger (2006) and Heathcote, Storesletten and Violante (2017)). Importantly, the optimal level of tax progressivity is strongly aected by the design of the health insurance system. When health expenditure risk is reduced or removed from the model, the optimal tax system becomes less progressive and thus more similar to the optimal progressivity levels reported in the previous literature.

Social Health Insurance: A Quantitative Exploration

SSRN Electronic Journal, 2016

We quantitatively explore the welfare benets of health insurance over the lifecycle in a dynamic ... more We quantitatively explore the welfare benets of health insurance over the lifecycle in a dynamic general equilibrium model with health risk and a health care sector. We consider three distinct approaches to designing a health insurance system: (i) a mixed private and public health insurance system similar to the US system, (ii) private health insurance (PHI), and (iii) universal public health insurance (UPHI). Our results indicate that the introduction of the US system into an economy without any health insurance results in large welfare gains, but does not produce the best welfare outcome. The PHI system with some government regulation on premiums is viable and produces welfare gains comparable to the welfare gains generated by the US system. The UPHI system with a high enough coinsurance rate produces better overall welfare outcomes than the other two systems. There exists an optional coinsurance rate that maximizes the welfare benets of the UPHI system. A structural reform that replaces the US system with the UPHI systemi.e., Medicare for allis welfare improving, but would face political headwinds due to opposing welfare eects across income groups.

A Macroeconomic Analysis of Energy Subsidies in a Small Open Economy: The Case of Egypt

SSRN Electronic Journal, 2012

We construct a dynamic general equilibrium model to analyze the effects of large energy subsidies... more We construct a dynamic general equilibrium model to analyze the effects of large energy subsidies in a small open economy. The model pays special attention to domestic energy production and consumption, trade in energy at world market prices, as well as private and public sector production including the provision of public infrastructure. The model is calibrated to data from Egypt and then used to study policy reforms such as reductions in energy subsidies with corresponding reductions in consumption taxes, labor taxes, capital taxes, or increases in infrastructure investment. We calculate the new steady states, the transition paths to the new steady state and the size of the associated welfare losses or gains. In response to a 15 percent cut in energy subsidies, GDP may fall as less energy is used in production. Excess energy is exported and capital imports are reduced. Welfare in consumption equivalent terms can rise by up to 0.6 percent of GDP. Gains in output can be realized only if the government reinvests into infrastructure.

The Timing of Redistribution

We investigate whether late redistribution programs that can be targeted towards low income famil... more We investigate whether late redistribution programs that can be targeted towards low income families, but may distort savings decisions, can "dominate" early redistribution programs that cannot be targeted due to information constraints. We use simple two-period OLG models with heterogeneous agents under six policy regimes: A model calibrated to the U.S. economy (benchmark), two early redistribution (lump sum) regimes, two (targeted) late redistribution regimes, and finally a model without taxes and redistribution. Redistribution programs are financed by a labor tax on the young and a capital tax on the old generation. We argue that late redistribution, if the programs are small in size, can dominate early redistribution in terms of welfare but not in terms of real output. Better targeting of low income households cannot completely offset savings distortions. In addition, we find that the optimal transfer and tax policy implies a capital tax of 100 percent and transfers exclusively to the young generation.

Transfers and Labor Market Behavior of the Elderly in Developing Countries: Theory and Evidence from Vietnam

SSRN Electronic Journal, 2009

In this paper I analyze the crowding-out effects of public transfers on labor supply of the elder... more In this paper I analyze the crowding-out effects of public transfers on labor supply of the elderly in the context of developing countries. I argue that the interactions between private transfers recieved and labor supplied by the elderly affect the oppportunity cost of retirement and therefore magnify the crowding-out effects of public transfers on the labor supply of the elderly. Using household survey data from Vietnam, I find the evidence supporting this hypothesis. That is, the crowding-out effect is about two times larger when accounting for the endogeneity of private transfers, which is caused by the interactions of private transfers and the labor supply.

Fiscal Austerity Measures: Spending Cuts vs. Tax Increases

SSRN Electronic Journal, 2013

We study the macroeconomic and welfare effects of decumulating government debt in an overlapping ... more We study the macroeconomic and welfare effects of decumulating government debt in an overlapping generations model with skill heterogeneity and productive and non-productive government programs. Our results are: First, in the small open economy model calibrated to Greece, the spending-based austerity reform dominates the tax-based reform with respect to income effects but not with respect to the welfare effect. A mixed reform combining the tax-based and spending-based measures results in the largest welfare effects of up to 1.8 percent of pre-reform consumption. Second, the welfare effects vary significantly along the transition to the post reform steady state, depending not only on fiscal austerity measures, but also on skill types, working sectors and generations. When consumption taxes adjust the aggregate welfare effects are positive but the current old and middle age generations experience welfare losses while current young workers and future generations are beneficiaries. Third, interactions between fiscal distortions and the risk premium as well as accessibility to international capital markets strongly influence the effects of fiscal austerity. Larger growth and welfare effects are observed when the risk premium is larger than zero and when access to international capital markets is restricted.

The determinants of federal and state enforcement of workplace safety regulations: OSHA inspections 1990–2010

Journal of Regulatory Economics, 2013

Does the availability of parental health insurance affect the college enrollment decision of young Americans?

Economics of Education Review, 2013

The present study examines whether the college enrollment decision of young individuals (student ... more The present study examines whether the college enrollment decision of young individuals (student full-time, student part-time, non-student) depends on health insurance coverage via a parent's family health plan. Our findings indicate that the availability of parental health insurance has significant effects on the probability that a young individual enrolls as a full-time student. A young individual who has access to health insurance via a parent is up to 22 percent more likely to enroll as a full-time student than an individual without parental health insurance. After controlling for unobserved heterogeneity this probability drops to 5.5-6.5 percent but is still highly significant. We also find that the marginal effect of the availability of parental health insurance has a larger effect on older students between ages 21-23. We provide a brief discussion about possible implications of the Affordable Care Act of 2010 in this context.

The Affordable Care Act and College Enrollment Decisions

SSRN Electronic Journal, 2016

We investigate the effect of the extension of the federal dependent coverage mandate for young ad... more We investigate the effect of the extension of the federal dependent coverage mandate for young adults under the Affordable Care Act (ACA) on the college enrollment decisions of young Americans. The ACA removes the conditionality that young individuals need to be enrolled as full-time students in order to be able to remain on their parents' health insurance past the age of 18 and extends the coverage mandate to age 26 irrespective of student status. This expansion of the coverage mandate changes the incentives for the full-time and part-time college enrollment decisions of young individuals. We use panel data from the Survey of Income and Program Participation (SIPP) for the years 2003-2013 and estimate that the dependent coverage expansion under the ACA decreases the probability to enroll as full-time student by 2 to 3 percentage points. Furthermore we find that part-time college enrollment is unaffected by the new policy. The results from a difference-indifferences model are robust to changes in the model specification and become stronger when we increase the sample overlap between treatment and control groups using trimming based on propensity scores.

Public Pensions and Capital Accumulation: The Case of Brazil

CESifo Working Paper Series …, Jan 1, 2005

We use an OLG model to study the effects of the generous public sector pension system in Brazil. ... more We use an OLG model to study the effects of the generous public sector pension system in Brazil. In our model there are two types of workers, one working in the private sector, the other working in the public sector. Public workers produce infrastructure or education services. We find that reducing generosity of the public sector pensions has large effects on capital accumulation and steady state income.

The Macroeconomics of Health Savings Accounts

Caepr Working Papers, Jan 1, 2008

Health Care Financing over the Life Cycle, Universal Medical Vouchers and Welfare

Towson University, Department of Economics, …, Jan 1, 2009

In this paper we develop a stochastic dynamic general equilibrium overlapping generations (OLG) m... more In this paper we develop a stochastic dynamic general equilibrium overlapping generations (OLG) model with health as a durable good to study the life-cycle behaviors of health care spending and financing. We show that a calibrated version of our generalized Grossman model is able to match the life-cycle trend of insurance take up ratios and average medical expenditure from the Medical Expenditure Panel Survey (MEPS) data in 2004/05. We then apply our model to analyze the macroeconomic implications of a counter factual health care reform in the U.S., using a system of universal health insurance vouchers. Our results suggest that health insurance vouchers are able to extend insurance coverage to the entire population but they also increase aggregate spending on health. More importantly, we find that the positive insurance effect (efficient risk pooling) dominates the negative incentive effect (tax distortions and moral hazard) which results in significant welfare gains for all generations when a payroll tax is used to finance the voucher program. In addition, our results suggest that the choice of tax financing instrument and accounting for general equilibrium adjustments are critical in determining the performance of the voucher program.

The Macroeconomics of Universal Health Insurance Vouchers: Supplementary Documentation

Medical Consumption over the Life Cycle

In this paper we construct life-cycle profiles of health care spending and financing using data f... more In this paper we construct life-cycle profiles of health care spending and financing using data from the Medical Expenditure Panel Survey (MEPS). We separate pure age effects from time and cohort effects by estimating a seminonparametric partial linear model. After controlling for time and cohort effects, we find that medical expenditure age profiles follow an upward trend whereas private insurance take-up profiles over age exhibit a hump-shape. In addition, we find that time effects (i.e. productivity effects, business cycle effects, etc.) dominate cohort effects (i.e. initial condition effects) in size despite the fact that we adjust for inflation in the variables measuring medical expenditures. Health expenditure profiles based on simple inflation adjusted values therefore overpredict the effects of age on health expenditures, especially for agents older than 60.

Macroeconomic implications of early retirement in the public sector: The case of Brazil

Journal of Economic Dynamics and Control, Jan 1, 2009

In Brazil generous public sector pensions have induced civil servants to retire on average at age... more In Brazil generous public sector pensions have induced civil servants to retire on average at age 55. In this paper we use an OLG model to assess the effects of such policy induced early retirement on capital accumulation and long-run income levels. We calibrate the model to data from Brazil and then conduct policy experiments changing the generosity of (early) public sector pensions. We find that the current generosity of public sector pensions which induces civil servants to retire 10 years prematurely (at age 55 rather than at age 65) is often associated with decreases in steady state output (GDP) of over 2 percent and welfare losses in the private sector of more than 1 percent of consumption.

The Extension of Social Security Coverage in Developing Countries

We investigate the dynamic general equilibrium effects of introducing a social assistance program... more We investigate the dynamic general equilibrium effects of introducing a social assistance program to elderly informal sector workers in developing countries. We find that the extension of such "retirement benefits" in environments with lacking private sector risksharing mechanisms results in welfare increases and relatively minor efficiency losses. Our results suggest that welfare gains attributed to the insurance and redistribution function of the social assistance program dominate welfare losses from distortionary effects of pension payments.

Healthcare Reform and Gender Specific Child Investment in Developing Countries

SSRN Electronic Journal, 2020

We estimate to what extent a large scale health care reform disproportionately affects the mortal... more We estimate to what extent a large scale health care reform disproportionately affects the mortality rate of boys in the context of a developing country with cultural preferences favoring boys. We use arguably exogenous variations due to a health care reform-the National Health Policy-which was implemented in Nepal in 1991 along with data from the Nepal Living Standard Survey 1996 and estimate that improved quality of primary health care facilities (by one standard deviation) reduces the mortality rate of infant boys by 3.3 percentage points but does not affect the mortality rate of infant girls. We then construct a new cost measure for access to care in newly provisioned hospitals and find that higher access costs (by one standard deviation) increase the mortality rate of infant boys by 4 percentage points after the reform but, again, do not affect the mortality rate of girls. Our analysis points to societal gender preferences for sons and the consequent neglect of daughters' health as potential drivers of some of the observed differences in mortality between genders. Our research highlights the important role of cultural norms in shaping the outcomes of large scale health care reforms.

Health Risk and the Welfare Effects of Social Security

SSRN Electronic Journal, 2020

We quantify the importance of idiosyncratic health risk in a calibrated general-equilibrium model... more We quantify the importance of idiosyncratic health risk in a calibrated general-equilibrium model of Social Security. We construct an overlapping-generations model with rational-expectations households, idiosyncratic labor income and health risk, profit-maximizing firms, incomplete insurance markets, and a government that provides pensions and health insurance. We calibrate this model to the U.S. economy and perform two sets of computational experiments: (i) we decrease the size of Social Security, and (ii) we modify the progressivity of Social Security's benefit-earnings rule. We find that cutting Social Security's payroll tax in general equilibrium increases overall welfare, but by a lesser extent when health risk is present. When we modify the progressivity of Social Security's benefit-earnings rule, we find that a lump-sum benefit unrelated to past income increases overall welfare, but by a larger extent in the presence of health risk. A linear (fully proportional) benefit-earnings rule, on the other hand, reduces overall welfare, but also by a larger extent in the presence of health risk. Together, our results suggest that Social Security's implicit insurance is more valuable for low-and medium-income households when health risk is present in the model environment.

Coronavirus Infections and Deaths by Poverty Status: Time Trends and Patterns

SSRN Electronic Journal, 2020

We study the spread of COVID-19 infections and deaths by county poverty level in the US. In the b... more We study the spread of COVID-19 infections and deaths by county poverty level in the US. In the beginning of the pandemic, counties with either very low poverty levels or very high poverty levels reported the highest numbers of cases. A U-shaped relationship prevails for counties with high population density while among counties with low population density, only poorer counties report high incidence rates of COVID-19. Second, we discuss the pattern of infections spreading from higher to lower income counties. Third, we show that stay-at-home mandates caused significantly higher reductions in mobility in high income counties that experienced adverse weather shocks than counties that did not. These effects are not present in counties with high poverty rates. Using weather shocks in combination with stay-at-home mandates as an instrument for social distancing, we find that measures taken to promote social distancing helped curb infections in high income counties but not in low income counties. These results have important policy implications for containing the spread of infectious diseases in the future.

Aging and Health Financing in the U.S. - A General Equilibrium Analysis

SSRN Electronic Journal, 2006

We quantify the effects of population aging on the US healthcare system. Our analysis is based on... more We quantify the effects of population aging on the US healthcare system. Our analysis is based on a stochastic general equilibrium overlapping generations model of endogenous health accumulation calibrated to match pre-2010 U.S. data. We find that population aging not only leads to large increases in medical spending but also a large shift in the relative size of public vs. private insurance. Without the Affordable Care Act (ACA), aging itself leads to a 36.6 percent increase in health expenditures by 2060 and a 5 percent increase in GDP which is driven by the expansion of the healthcare sector. The group-based health insurance (GHI) market shrinks, while the individual-based health insurance (IHI) market and Medicaid expand significantly. Additional funds equivalent to roughly 4 percent of GDP are required to finance Medicare in 2060 as the elderly dependency ratio increases. The introduction of the ACA increases the fraction of insured workers to 99 percent by 2060, compared to 81 percent without the ACA. This additional increase is mainly driven by the further expansion of Medicaid and the IHI market and the stabilization of the GHI market. Interestingly, the ACA reduces aggregate health care spending by enrolling uninsured workers into Medicaid which pays lower prices for medical services. Overall, the ACA adds to the fiscal cost of population aging mainly via the Medicare and Medicaid expansion.

Optimal Progressive Income Taxation in a Bewley-Grossman Framework

SSRN Electronic Journal, 2017

We study optimal income tax progressivity in an environment where individuals are exposed to idio... more We study optimal income tax progressivity in an environment where individuals are exposed to idiosyncratic income and health risks over the lifecycle. Our results, based on a calibration for the US economy, indicate that the presence of health risk combined with incomplete insurance markets amplies the social insurance role of progressive income taxes. The government is required to set higher optimal levels of tax progressivity in order to provide more social insurance for unhealthy low income individuals who have limited access to health insurance. The optimal progressive income tax system includes a tax break for income below $36, 400 and high marginal tax rates of over 50 percent for income above $200, 000. The tax progressivity (Suits) indexa Gini coecient for income tax contributions by incomeof the optimal tax system is around 0.53, compared to 0.17 in the benchmark tax system. Yet, the optimal tax system in our model is more progressive than the optimal tax systems in models abstracting from health risk (e.g., Conesa and Krueger (2006) and Heathcote, Storesletten and Violante (2017)). Importantly, the optimal level of tax progressivity is strongly aected by the design of the health insurance system. When health expenditure risk is reduced or removed from the model, the optimal tax system becomes less progressive and thus more similar to the optimal progressivity levels reported in the previous literature.

Social Health Insurance: A Quantitative Exploration

SSRN Electronic Journal, 2016

We quantitatively explore the welfare benets of health insurance over the lifecycle in a dynamic ... more We quantitatively explore the welfare benets of health insurance over the lifecycle in a dynamic general equilibrium model with health risk and a health care sector. We consider three distinct approaches to designing a health insurance system: (i) a mixed private and public health insurance system similar to the US system, (ii) private health insurance (PHI), and (iii) universal public health insurance (UPHI). Our results indicate that the introduction of the US system into an economy without any health insurance results in large welfare gains, but does not produce the best welfare outcome. The PHI system with some government regulation on premiums is viable and produces welfare gains comparable to the welfare gains generated by the US system. The UPHI system with a high enough coinsurance rate produces better overall welfare outcomes than the other two systems. There exists an optional coinsurance rate that maximizes the welfare benets of the UPHI system. A structural reform that replaces the US system with the UPHI systemi.e., Medicare for allis welfare improving, but would face political headwinds due to opposing welfare eects across income groups.

A Macroeconomic Analysis of Energy Subsidies in a Small Open Economy: The Case of Egypt

SSRN Electronic Journal, 2012

We construct a dynamic general equilibrium model to analyze the effects of large energy subsidies... more We construct a dynamic general equilibrium model to analyze the effects of large energy subsidies in a small open economy. The model pays special attention to domestic energy production and consumption, trade in energy at world market prices, as well as private and public sector production including the provision of public infrastructure. The model is calibrated to data from Egypt and then used to study policy reforms such as reductions in energy subsidies with corresponding reductions in consumption taxes, labor taxes, capital taxes, or increases in infrastructure investment. We calculate the new steady states, the transition paths to the new steady state and the size of the associated welfare losses or gains. In response to a 15 percent cut in energy subsidies, GDP may fall as less energy is used in production. Excess energy is exported and capital imports are reduced. Welfare in consumption equivalent terms can rise by up to 0.6 percent of GDP. Gains in output can be realized only if the government reinvests into infrastructure.

The Timing of Redistribution

We investigate whether late redistribution programs that can be targeted towards low income famil... more We investigate whether late redistribution programs that can be targeted towards low income families, but may distort savings decisions, can "dominate" early redistribution programs that cannot be targeted due to information constraints. We use simple two-period OLG models with heterogeneous agents under six policy regimes: A model calibrated to the U.S. economy (benchmark), two early redistribution (lump sum) regimes, two (targeted) late redistribution regimes, and finally a model without taxes and redistribution. Redistribution programs are financed by a labor tax on the young and a capital tax on the old generation. We argue that late redistribution, if the programs are small in size, can dominate early redistribution in terms of welfare but not in terms of real output. Better targeting of low income households cannot completely offset savings distortions. In addition, we find that the optimal transfer and tax policy implies a capital tax of 100 percent and transfers exclusively to the young generation.

Transfers and Labor Market Behavior of the Elderly in Developing Countries: Theory and Evidence from Vietnam

SSRN Electronic Journal, 2009

In this paper I analyze the crowding-out effects of public transfers on labor supply of the elder... more In this paper I analyze the crowding-out effects of public transfers on labor supply of the elderly in the context of developing countries. I argue that the interactions between private transfers recieved and labor supplied by the elderly affect the oppportunity cost of retirement and therefore magnify the crowding-out effects of public transfers on the labor supply of the elderly. Using household survey data from Vietnam, I find the evidence supporting this hypothesis. That is, the crowding-out effect is about two times larger when accounting for the endogeneity of private transfers, which is caused by the interactions of private transfers and the labor supply.

Fiscal Austerity Measures: Spending Cuts vs. Tax Increases

SSRN Electronic Journal, 2013

We study the macroeconomic and welfare effects of decumulating government debt in an overlapping ... more We study the macroeconomic and welfare effects of decumulating government debt in an overlapping generations model with skill heterogeneity and productive and non-productive government programs. Our results are: First, in the small open economy model calibrated to Greece, the spending-based austerity reform dominates the tax-based reform with respect to income effects but not with respect to the welfare effect. A mixed reform combining the tax-based and spending-based measures results in the largest welfare effects of up to 1.8 percent of pre-reform consumption. Second, the welfare effects vary significantly along the transition to the post reform steady state, depending not only on fiscal austerity measures, but also on skill types, working sectors and generations. When consumption taxes adjust the aggregate welfare effects are positive but the current old and middle age generations experience welfare losses while current young workers and future generations are beneficiaries. Third, interactions between fiscal distortions and the risk premium as well as accessibility to international capital markets strongly influence the effects of fiscal austerity. Larger growth and welfare effects are observed when the risk premium is larger than zero and when access to international capital markets is restricted.

The determinants of federal and state enforcement of workplace safety regulations: OSHA inspections 1990–2010

Journal of Regulatory Economics, 2013

Does the availability of parental health insurance affect the college enrollment decision of young Americans?

Economics of Education Review, 2013

The present study examines whether the college enrollment decision of young individuals (student ... more The present study examines whether the college enrollment decision of young individuals (student full-time, student part-time, non-student) depends on health insurance coverage via a parent's family health plan. Our findings indicate that the availability of parental health insurance has significant effects on the probability that a young individual enrolls as a full-time student. A young individual who has access to health insurance via a parent is up to 22 percent more likely to enroll as a full-time student than an individual without parental health insurance. After controlling for unobserved heterogeneity this probability drops to 5.5-6.5 percent but is still highly significant. We also find that the marginal effect of the availability of parental health insurance has a larger effect on older students between ages 21-23. We provide a brief discussion about possible implications of the Affordable Care Act of 2010 in this context.

The Affordable Care Act and College Enrollment Decisions

SSRN Electronic Journal, 2016

We investigate the effect of the extension of the federal dependent coverage mandate for young ad... more We investigate the effect of the extension of the federal dependent coverage mandate for young adults under the Affordable Care Act (ACA) on the college enrollment decisions of young Americans. The ACA removes the conditionality that young individuals need to be enrolled as full-time students in order to be able to remain on their parents' health insurance past the age of 18 and extends the coverage mandate to age 26 irrespective of student status. This expansion of the coverage mandate changes the incentives for the full-time and part-time college enrollment decisions of young individuals. We use panel data from the Survey of Income and Program Participation (SIPP) for the years 2003-2013 and estimate that the dependent coverage expansion under the ACA decreases the probability to enroll as full-time student by 2 to 3 percentage points. Furthermore we find that part-time college enrollment is unaffected by the new policy. The results from a difference-indifferences model are robust to changes in the model specification and become stronger when we increase the sample overlap between treatment and control groups using trimming based on propensity scores.

Public Pensions and Capital Accumulation: The Case of Brazil

CESifo Working Paper Series …, Jan 1, 2005

We use an OLG model to study the effects of the generous public sector pension system in Brazil. ... more We use an OLG model to study the effects of the generous public sector pension system in Brazil. In our model there are two types of workers, one working in the private sector, the other working in the public sector. Public workers produce infrastructure or education services. We find that reducing generosity of the public sector pensions has large effects on capital accumulation and steady state income.

The Macroeconomics of Health Savings Accounts

Caepr Working Papers, Jan 1, 2008

Health Care Financing over the Life Cycle, Universal Medical Vouchers and Welfare

Towson University, Department of Economics, …, Jan 1, 2009

In this paper we develop a stochastic dynamic general equilibrium overlapping generations (OLG) m... more In this paper we develop a stochastic dynamic general equilibrium overlapping generations (OLG) model with health as a durable good to study the life-cycle behaviors of health care spending and financing. We show that a calibrated version of our generalized Grossman model is able to match the life-cycle trend of insurance take up ratios and average medical expenditure from the Medical Expenditure Panel Survey (MEPS) data in 2004/05. We then apply our model to analyze the macroeconomic implications of a counter factual health care reform in the U.S., using a system of universal health insurance vouchers. Our results suggest that health insurance vouchers are able to extend insurance coverage to the entire population but they also increase aggregate spending on health. More importantly, we find that the positive insurance effect (efficient risk pooling) dominates the negative incentive effect (tax distortions and moral hazard) which results in significant welfare gains for all generations when a payroll tax is used to finance the voucher program. In addition, our results suggest that the choice of tax financing instrument and accounting for general equilibrium adjustments are critical in determining the performance of the voucher program.

The Macroeconomics of Universal Health Insurance Vouchers: Supplementary Documentation

Medical Consumption over the Life Cycle

In this paper we construct life-cycle profiles of health care spending and financing using data f... more In this paper we construct life-cycle profiles of health care spending and financing using data from the Medical Expenditure Panel Survey (MEPS). We separate pure age effects from time and cohort effects by estimating a seminonparametric partial linear model. After controlling for time and cohort effects, we find that medical expenditure age profiles follow an upward trend whereas private insurance take-up profiles over age exhibit a hump-shape. In addition, we find that time effects (i.e. productivity effects, business cycle effects, etc.) dominate cohort effects (i.e. initial condition effects) in size despite the fact that we adjust for inflation in the variables measuring medical expenditures. Health expenditure profiles based on simple inflation adjusted values therefore overpredict the effects of age on health expenditures, especially for agents older than 60.

Macroeconomic implications of early retirement in the public sector: The case of Brazil

Journal of Economic Dynamics and Control, Jan 1, 2009

In Brazil generous public sector pensions have induced civil servants to retire on average at age... more In Brazil generous public sector pensions have induced civil servants to retire on average at age 55. In this paper we use an OLG model to assess the effects of such policy induced early retirement on capital accumulation and long-run income levels. We calibrate the model to data from Brazil and then conduct policy experiments changing the generosity of (early) public sector pensions. We find that the current generosity of public sector pensions which induces civil servants to retire 10 years prematurely (at age 55 rather than at age 65) is often associated with decreases in steady state output (GDP) of over 2 percent and welfare losses in the private sector of more than 1 percent of consumption.

The Extension of Social Security Coverage in Developing Countries

We investigate the dynamic general equilibrium effects of introducing a social assistance program... more We investigate the dynamic general equilibrium effects of introducing a social assistance program to elderly informal sector workers in developing countries. We find that the extension of such "retirement benefits" in environments with lacking private sector risksharing mechanisms results in welfare increases and relatively minor efficiency losses. Our results suggest that welfare gains attributed to the insurance and redistribution function of the social assistance program dominate welfare losses from distortionary effects of pension payments.