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on Health Economics |
| By: | Johannes Schünemann (University of Fribourg, Department of Economics); Holger Strulik (University of Goettingen, Department of Economics); Timo Trimborn (Department of Economics and Business Economics, Aarhus University) |
| Abstract: | For the population over 65, long-term care (LTC) expenditure constitutes a considerable share in health care expenditures. In this paper, we decompose health care into medical care, intended to improve one’s state of health, and personal care required for daily routine. Personal care can be either carried out autonomously or by a third party. In the course of aging, autonomous personal care is gradually substituted by LTC. We set up a life-cycle model in which individuals are subject to physiological aging, calibrate it with data from gerontology, and analyze the interplay between medical care and LTC. In comparative dynamic analyses, our theory-based approach allows us to causally investigate the impact of better health and rising life expectancy, triggered by higher income and better medical technology, on the expected expenditures for LTC in the future. We predict a 1.75-percentage increase in expected LTC expenditure per percentage increase in life expectancy. In terms of present value at age 20, this elasticity declines to around 1 percent. Even when considering different magnitudes of shocks in medical technology and income, we find that these elasticities remain remarkably stable. |
| Keywords: | Health, Long-Term Care, Health Behavior, Life Expectancy |
| JEL: | D11 D91 I12 J11 |
| Date: | 2021–05–17 |
| URL: | http://d.repec.org/n?u=RePEc:aah:aarhec:2021-07&r= |
| By: | Boone, Jan |
| Abstract: | This paper shows that it is possible for intermediate goods to be priced above the value that the good has for final consumers. This happens in sectors selling to adverse selection markets where the cost difference between consumer types is dominated by their elasticity difference. High input prices then help to separate consumer types. An increase in competition can raise prices further. We use the example of pharmaceutical companies selling drugs to a health insurance market at prices exceeding value. Another feature of the model is an excessive private incentive to reduce market size, e.g. in the form of personalized medicine. |
| Keywords: | Adverse Selection; pharmaceutical prices; pricing above value; risk equalization; Vertical Relations |
| JEL: | I11 I13 |
| Date: | 2020–09 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:15279&r= |
| By: | Anna Werbeck; Ansgar Wübker; Nicolas R. Ziebarth |
| Abstract: | Using a randomized field experiment, we show that health care specialists cream-skim patients by their expected profitability. In the German two-tier system, outpatient reimbursement rates for both public and private insurance are centrally determined but are significantly higher for the privately insured. In our field experiment, following a standardized protocol, the same hypothetical patient called 991 private practices in 36 German counties to schedule appointments for allergy tests, hearing tests and gastroscopies. Practices were 4% more likely to offer an appointment to the privately insured. Conditional on being offered an appointment, wait times for the publicly insured were twice as long than for the privately insured. We also find smaller access differences when reimbursement rate differences are smaller. Our findings show that structural differences in reimbursement rates lead to structural differences in health care access. |
| JEL: | I11 I14 I18 |
| Date: | 2021–05 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:28809&r= |
| By: | Ziad Ghandour (Universidade do Minho, Escola de Economia e Gestão, Centre for Research in Economics and Management (NIPE)); Luigi Siciliani (Department of Economics and Related Studies, University of York); Odd Rune Straume (Department of Economics/NIPE, University of Minho and Department of Economics, University of Bergen) |
| Abstract: | We study the strategic relationship between hospital investment in health technologies and provision of service quality. We use a spatial competition framework with altruistic providers and allow for hospital investment and quality provision to be either complements or substitutes in the patient health benefit and provider cost functions. We assume that each hospital commits to a certain investment level before deciding on the provision of service quality. We show that, compared to a simultaneous-move benchmark, providers´lack of ability to commit to a particular quality level generally leads to either under- or overinvestment. Underinvestment arises when the price-cost margin is positive and when quality and investments are strategic complements. In turn, this has implications for the optimal design of hospital payment contracts. We show that, differently from the simultaneous-move case, the first-best solution is generally not attainable by setting the fixed price at the appropriate level, but the regulator must complement the payment contract with at least one more instrument to address under- or overinvestment. We also analyse the welfare effects of different policy options (separate payment for investment, through a higher per-treatment price, or refinement of pricing) to reimburse hospitals for their investments. |
| Keywords: | Investment; Quality competition; Hospital payment |
| JEL: | D24 I11 I18 L13 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:nip:nipewp:3/2021&r= |
| By: | Handel, Benjamin R.; Kolstad, Jonathan; Minten, Thomas; Spinnewijn, Johannes |
| Abstract: | Market provision of impure public goods such as insurance, retirement savings and education is common and growing as policy makers seek to offer more choice and gain efficiencies. This approach induces an important trade-off between improved surplus from matching individuals to products and misallocation due to well documented choice errors in these markets. We study this trade-off in the health insurance market in the Netherlands, with a specific focus on misallocation and inequality. We characterize choice quality as a function of predicted health risk and leverage rich administrative data to study how it depends on individual human capital, socioeconomic status and social and information networks. We find that choice quality is low on average, with many people foregoing options that deliver substantive value. We also find a strong choice quality gradient with respect to key socioeconomic variables. Individuals with higher education levels and more analytic degrees or professions make markedly better decisions. Social influence on choices further increases inequality in decision making. Using panel variation in exposure to peers we find strong within firm, location and family impacts on choice quality. Finally, we use our estimates to model the consumer surplus effects of different counterfactual scenarios. While smart default policies could improve welfare substantially, including the choice of a high-deductible option delivers little welfare gain, especially for low-income individuals who make lower quality choices and are in worse health. |
| Date: | 2020–09 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:15302&r= |
| By: | Petri Bockerman (University of Jyvaskyla, Labour Institute for Economic Research, and IZA Institute of Labor Economics); Mika Haapanen (University of Jyvaskyla, School of Business and Economics); Christopher Jepsen (University College Dublin, School of Economics and Geary Institute, IZA Institute of Labor Economics, and CES-Ifo) |
| Abstract: | This paper studies the causal effect of parental death on children's mental health. Combining several nationwide register-based data for Finnish citizens born between 1971 and 1986, we use an event study methodology to analyze hospitalization for mental health-related reasons by the age of 30. We find that there is no clear evidence of increased hospitalization following the death of a parent of a different gender, but there are significant effects for boys losing their fathers and girls losing their mothers. Depression is the most common cause of hospitalization in the first three years following paternal death, whereas anxiety and, to a lesser extent, self-harm are the most common causes five to ten years after paternal death. We also provide descriptive evidence of an increase in the use of mental health-related medications and sickness absence, as well as substantial reductions in years of schooling, employment, and earnings in adulthood for the affected children. |
| Keywords: | parental death, mental health, hospitalization, depression, labor market |
| JEL: | I10 I12 |
| Date: | 2021–03–11 |
| URL: | http://d.repec.org/n?u=RePEc:ucd:wpaper:202107&r= |
| By: | Priyanka Anand; Laura Dague; Kathryn L. Wagner |
| Abstract: | The onset of a disability or major health shock can affect the labor supply of not only those experiencing the event but also their family members. Potential caregivers face a tradeoff between time spent earning income for the family and providing care for their spouse, which could be affected by the availability of paid leave. We examine caregiving and labor supply decisions after a spouse’s disability or health shock and the role of paid leave laws implemented in California and New Jersey in the response using data from the Survey of Income and Program Participation (SIPP). We show that labor force participation of potential caregivers decreased after spousal work-limiting disability or chronic health condition and, to a lesser extent, work-limiting illness. We find that paid leave reduces the likelihood that potential caregivers decrease their work hours to provide caregiving to their spouse after a work-limiting disability or chronic health condition, but limited evidence of effects on other employment outcomes. Our findings demonstrate that spousal disability and health shocks have long-run effects on household labor supply and therefore could be mediated by paid leave; we conclude by discussing possible reasons for finding limited impact in this context. |
| JEL: | I12 I18 J12 J18 J32 |
| Date: | 2021–05 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:28808&r= |
| By: | Kristjana Baldursdottir; Paul McNamee; Edward C. Norton; Tinna Laufey Asgeirsdóttir |
| Abstract: | According to the World Health Organization, obesity is one of the greatest public-health challenges of the 21st century. Body weight is also known to affect individuals’ self-esteem and interpersonal relationships, including romantic ones. We estimate “utility-maximizing” Body Mass Index (BMI) and calculate the implied monetary value of changes in both individual and spousal BMI, using the compensating income variation method and data from the Swiss Household Panel. Two-stage least squares models are estimated for women and men separately, with mother’s education as an instrument to account for the potential endogeneity in income. Results suggest that the optimal own BMI is 27.4 and 22.7 for men and women, respectively. The annual value of reaching optimal weight ranges from $3,235 for underweight women to $32,378 for obese women and from $19,088 for underweight men to $43,175 for obese men. Women on average value changes in their own BMI about three times higher than changes in their spouse’s BMI. Men, on the other hand, value a reduction in their spouse’s BMI almost twice as much compared to a reduction in their own BMI. Married couples therefore agree on one thing, that keeping the wife svelte is even more valuable than keeping the husband fit. |
| JEL: | I12 I14 I18 I31 |
| Date: | 2021–05 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:28791&r= |
| By: | Blanco, Magdalena; Cabrera, Jose Maria; Carozzi, Felipe; Cid, Alejandro |
| Abstract: | We study the impact of mandatory motorcycle helmet use laws on the severity and volume of road accidents in Uruguay by exploiting a change in the enforcement of the traffic law. Using event-study, differences-in-difference and synthetic control methods, we report a sharp increase in helmet use and a 40 percent reduction in the incidence of serious or fatal motorcyclist accidents as a result of the change in enforcement. The change translates into an increase in minor injuries, indicating a shift in the distribution of accident severity. We find no evidence of other behavioral responses in terms of either the volume or type of accidents. We show that additional costs of enforcement for the relevant government agencies were negligible and estimate the health benefits of the policy. |
| Keywords: | Helmet Use; law enforcement; Traffic Accidents |
| JEL: | H89 I12 I18 R41 |
| Date: | 2020–11 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:15501&r= |
| By: | Joanna Aleksandra Kopinska; Vincenzo Atella; Jay Bhattacharya; Grant Miller |
| Abstract: | Standard measures of bodyweight (overweight and obese, for example) fail to reflect technological progress over time - and in particular, recent progress disproportionately promoting longevity at higher bodyweights (and differences in access to it). This paper builds on the pioneering work of HansWaaler (Waaler, 1984) and Robert Fogel (Fogel, 1994) to empirically estimate how technological progress, and differential access to it, have fundamentally transformed the relationship between body mass index (BMI) and longevity in high-, middle-, and low-income countries. Importantly, we show that the combined effect of technological progress and access to it across countries is so profound that the share of national populations above mortality-minimizing bodyweight is not clearly greater in countries with higher overweight and obesity rates (as traditionally defined) - and in fact, relative to current standards, a larger share of low-income countries’ populations can be unhealthily heavy. |
| JEL: | I1 I14 I15 O33 |
| Date: | 2021–05 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:28813&r= |
| By: | Sanchez-Romero, Miguel; Schuster, Philip; Prskawetz, Alexia |
| Abstract: | As the heterogeneity in life expectancy by socioeconomic status increases, pension systems become more regressive implying wealth transfers from short to long lived individuals. Various pension reforms aim to reduce these inequalities that are caused by ex-ante differences in life expectancy. However, these pension reforms may themselves induce redistribution effects since a) life expectancy is not perfectly correlated to socioeconomic status and b) pension reforms themselves will have an impact on life cycle decisions (education, consumption, health, labor supply) and ultimately also on life expectancy and the composition of the population. To account for these feedback effects of pension reforms in heterogenous aging societies we propose an OLG framework that is populated by heterogeneous individuals that initially differ by their learning ability and disutility from the effort of attending schooling. These initial heterogeneities imply differences in ex ante life expectancies. Within this framework we study two pension reforms that aim to account for these differences in ex ante life expectancies. We show that by including the feedback of pension reforms on individual behavior, new redistributions may result. |
| Keywords: | Overlapping generations,Mortality and fertility differentials,Inequality,Life cycle,Pensions,Progressivity |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:tuweco:062021&r= |
| By: | Dominic Byrne (School of Economics, University of Queensland); Do Won Kwak (Graduate School of International Studies, Korea University, Seoul, Korea); Kam Ki Tang (School of Economics, University of Queensland, Australia); Myra Yazbeck (Department of Economics, University of Ottawa, Canada; School of Economics, University of Queensland) |
| Abstract: | The current literature investigating the impact of retirement and the associated spousal spillover effects overlooks the unintended effects of retirement on spouses in vulnerable health, namely spouses with long-term health conditions. In this paper, we fill this gap in the literature and investigate the impact of an individual’s retirement on their partner’s health outcomes when their partner has long-term health conditions. Given the inherent identification challenges associated with entry into retirement, we exploit an exogenous variation of pension-qualifying age in Australia. Using this exogenous variation as an instrument and data from the Household Income and Labour Dynamics in Australia survey, we find that the husband’s retirement has a positive impact on the wife’s quality adjusted life years (QALY) and other physical and mental health outcomes. Drawing upon the literature on QALY and cost-effectiveness thresholds, we estimate that the dollar value of the husband-to-wife spillovers could be worth somewhere between AUD7,000 and AUD21,000. We also identify redistribution of domestic workload as a key transmission mechanism of the spousal spillover effects. Women with LTHCs will see their QALY and health improves only if their husband devotes more time to domestic tasks after retirement. |
| Keywords: | Spillovers; Retirement; Long-term Health Conditions; QALY |
| JEL: | I31 I19 |
| Date: | 2021–04–28 |
| URL: | http://d.repec.org/n?u=RePEc:qld:uq2004:643&r= |
| By: | van Ours, Jan C. |
| Abstract: | This paper studies mental health and loneliness in the Netherlands for individuals beyond age 50. The analysis is based on panel data over the period 2008 to 2018 and focuses on the effects of life events and aging. It appears that mental health gets worse and loneliness increases if individuals lose their partner or become unemployed. On average, mental health of males and high educated females improves at retirement. With respect to aging, the main conclusions are that mental health improves while loneliness goes down at least up to the high 70s. From the perspective of mental health and loneliness it does not seem to be a drag getting old. |
| Keywords: | age; loneliness; mental health; old people |
| JEL: | I31 J14 |
| Date: | 2020–11 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:15438&r= |
| By: | Angelini, Viola; Mierau, Jochen O.; Viluma, Laura |
| Abstract: | This chapter provides a narrative review of the literature relating socioeconomic circumstances early in life to mental health and well-being later in life. It starts by highlighting the various contributions focusing on associations, then moves on to the literature attempting to identify causal effects before discussing the potential mechanisms at play. The chapter closes with a view toward research questions that may inform a future research agenda and highlights some anchors for policy. |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:glodps:844&r= |
| By: | Ghazala Azmat; Katja Maria Kaufmann; Yasemin Özdemir |
| Abstract: | We analyze the determinants and consequences of socioemotional development (SED) during adolescence. We causally estimate the impact of a large macro shock, the German Reunification, on the SED of East German youths, finding substantial negative effects in the short run. These effects are similar for male and female youths. However, linking changes in SED to behavior, we see stark differences by gender -observing important changes in externalizing behavior and behavioral control problems among males and changes in internalizing behavior among females only. Ultimately, however, the effects on longer-run outcomes (subjective health, wellbeing, education) are grave and similar for both genders. |
| Keywords: | socioemotional development, gender, uncertainty, behavior, health, educational outcomes |
| JEL: | D91 J13 J16 J24 I12 |
| Date: | 2021–05 |
| URL: | http://d.repec.org/n?u=RePEc:bon:boncrc:crctr224_2021_299&r= |
| By: | Johannes S. Kunz (Monash University); Kevin E. Staub (University of Melbourne); Rainer Winkelmann (University of Zurich) |
| Abstract: | Many applied settings in empirical economics require estimation of a large number of individual effects, like teacher effects or location effects; in health economics, prominent examples include patient effects, doctor effects, or hospital effects. Increasingly, these effects are the object of interest of the estimation, and predicted effects are often used for further descriptive and regression analyses. To avoid imposing distributional assumptions on these effects, they are typically estimated via fixed effects methods. In short panels, the conventional maximum likelihood estimator for fixed effects binary response models provides poor estimates of these individual effects since the finite sample bias is typically substantial. We present a bias-reduced fixed effects estimator that provides better estimates of the individual effects in these models by removing the first-order asymptotic bias. An additional, practical advantage of the estimator is that it provides finite predictions for all individual effects in the sample, including those for which the corresponding dependent variable has identical outcomes in all time periods over time (either all zeros or ones); for these, the maximum likelihood prediction is infinite. We illustrate the approach in simulation experiments and in an application to health care utilization. Stata estimation command is available at [Github:brfeglm](https://github.com/Joha nnesSKunz/brfeglm) |
| Keywords: | Incidental parameter bias, Perfect prediction, Fixed effects, Panel data, Bias reduction |
| JEL: | C23 C25 I11 I18 |
| Date: | 2021–05 |
| URL: | http://d.repec.org/n?u=RePEc:ajr:sodwps:2021-05&r= |
| By: | Silvia Castro; Kristina Czura |
| Abstract: | Inadequate hygiene during menstruation can have severe consequences, such as adverse health effects, lower educational attainment and higher work absenteeism. Cultural taboos and social norms surrounding menstruation may contribute to misinformation about menstrual hygiene and may also interfere with attempts to improve knowledge. Using lab-in-the-field experiments with women in rural Bangladesh, we measure social norms in the form of empirical and normative expectations about menstrual health and hygiene explicitly, and relate them to behavior and knowledge. We then provide an information intervention on menstrual health and hygiene and observe how this changes the perceived social norms. We find that the majority of women report decreased physical and mental well-being, in particular stress and shame, during their menstruation. Further, we find knowledge gaps on the proper use of hygienic material for menstrual health management and that empirical and normative expectations are well matched to reported adverse health behavior. The information intervention helps to correct harmful social norms, although results are more pronounced for women who have more autonomy and agency over their own decisions. |
| Keywords: | social norms, menstrual health management, menstrual hygiene, information, adverse health behavior |
| JEL: | I12 I15 D91 O12 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_9081&r= |
| By: | Zachary Gitonga; Nicole Vellios; Corne van Walbeek |
| Abstract: | South Africa successfully reduced smoking prevalence by substantially increasing tobacco excise tax and therefore real cigarette prices between 1993 and 2010. Tobacco market structure changed in 2010 following the entry of local tobacco companies and the introduction of cheaper cigarette brands. Illicit cigarettes have also increased significantly. This paper estimates price elasticities of smoking prevalence by gender and examines the effect of an increase in illicit cigarettes and changes in tobacco market structure on smoking behavior in South Africa. Two nationally representative longitudinal data sets and cigarette price data from Statistics South Africa, are used. We use pooled fractional probit correlated random effects and panel LPM models for estimation. Smoking prevalence and price sensitivity are higher among males than among females. Price elasticity of smoking prevalence is about -0.33 overall, -0.43 for males and -0.20 for females. The increase in illicit cigarettes and availability of cheaper brands reduce the effect of price on smoking prevalence and undermine tobacco control policy. The relatively price-inelastic demand implies that there is room for an increase in excise tax on cigarette. We recommend a further increase in excise taxes on tobacco and implementing a track and trace system to control illicit trade. |
| Keywords: | price elasticity, smoking prevalence, illicit trade, fractional probit, South Africa, structural break, tobacco control |
| JEL: | D00 D12 D40 I18 |
| Date: | 2021–04 |
| URL: | http://d.repec.org/n?u=RePEc:rza:wpaper:859&r= |
| By: | Adeola Oyenubi; Joseph Ajefu |
| Abstract: | We study the effect of income receipt in form of Old age pension (OAP) on the prevalence of depressive symptoms using the Centre of Epidemiologic Studies Short Depression Scale (CES-D 10). We exploit the exogeneous age eligibility criteria in a regression discontinuity (RD) design to estimate the impact of OAP on depressive symptoms. Using the randomized inference approach, we find a statistically significant evidence that the OAP reduces depressive symptoms among the beneficiaries. We find this effect vary by gender and employment status. Our result also suggests that the impact of OAP tends to increase with depression scores, that is, those with high depression score tend to benefit more. We note that since the CES-D 10 is a screening tool, this result only provides an indication that the expected positive relationship between income and health holds in this context. |
| Keywords: | Mental health, causal inference, old age pension, South Africa |
| JEL: | I14 I15 I18 |
| Date: | 2020–10 |
| URL: | http://d.repec.org/n?u=RePEc:rza:wpaper:838&r= |
| By: | Stefani Milovanska-Farrington; Stephen Farrington |
| Abstract: | Happiness is strongly associated with goal attainment, productivity, mental health and suicidal risk. This paper examines the effect of satisfaction with areas of life on subjective well-being (SWB), the importance of relative perceptions compared to absolute measures in predicting overall life satisfaction, and differences in the domains of life which have the greatest impact on happiness of men and women. The findings suggest that relative perceptions have a large statistically significant effect on SWB. Satisfaction with family life and health have the largest while satisfaction with income has the lowest impact on overall SWB for both genders. Work satisfaction is more important for men than for women, whereas partner’s happiness is more valued by female respondents. Satisfaction with household compared to personal income has a larger effect on SWB in all subsamples except employed women. Understanding the perceived and factual determinants of happiness has urgent implications in the context of the detrimental impact of the Covid-19 outbreak on SWB. |
| Keywords: | subjective well-being, satisfaction with areas of life, perceptions, values, gender differences |
| JEL: | D60 I31 J16 D03 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwsop:diw_sp1128&r= |
| By: | Jaqueline Hansen; Antonia Reinecke; Hans-Jörg Schmerer |
| Abstract: | In the beginning of the COVID-19 pandemic, governments had to rely on Non-Pharmaceutical Interventions in their struggle against the spread of the virus. The stringency of the lockdowns differed across space and time as governments had to adjust their strategy dynamically to the country-specific development of the crisis. We examine the effectiveness of lockdowns with a focus on the role of health care based upon both the between and the within-variation of our panel-data. The within-variation over time allows us to control for unobserved heterogeneity through fixed-effects. The results reveal that lockdowns had significant effects on the mortality rates associated with COVID-19. Marginal effects are estimated conditional on the state of the health care system before the crisis. Lockdowns were more efficient in countries with well-supported health care systems. Marginal effects turn insignificant when per capita health expenditure dips below the mean. We can show that both results are driven by economic development. Per capita GDP is highly correlated with public health expenditure but it is not a perfect substitute. |
| Keywords: | Covid-19, health expenditures, lockdown |
| JEL: | I10 I13 I14 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_9069&r= |
| By: | Bognanni, Mark; Hanley, Douglas; Kolliner, Daniel; Mitman, Kurt |
| Abstract: | Economic analysis of effective policies for managing epidemics requires an integrated economic and epidemiological approach. We develop and estimate a spatial, micro-founded model of the joint evolution of economic variables and the spread of an epidemic. We empirically discipline the model using new U.S. county-level data on health, mobility, employment outcomes, and non-pharmaceutical interventions (NPIs) at a daily frequency. Absent policy or medical interventions, the model predicts an initial period of exponential growth in new cases, followed by a protracted period of roughly constant case levels and reduced economic activity. Nevertheless, if vaccine development proved impossible, and suppression cannot entirely eradicate the disease, a utilitarian policymaker cannot improve significantly over the laissez-faire equilibrium by using lockdowns. Conversely, if a vaccine will arrive within two years, NPIs can improve upon the laissez-faire outcome by dramatically decreasing the number of infectious agents and keeping infections low until vaccine arrival. Mitigation measures that reduce viral transmission (e.g., mask-wearing) both reduce the virus's spread and increase economic activity. |
| Keywords: | COVID19; Econ-SIR; Economic Policy; Epidemics |
| Date: | 2020–09 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:15310&r= |
| By: | Kaplan, Greg; Moll, Benjamin; Violante, Giovanni L. |
| Abstract: | We provide a quantitative analysis of the trade-offs between health outcomes and the distribution of economic outcomes associated with alternative policy responses to the COVID-19 pandemic. We integrate an expanded SIR model of virus spread into a macroeconomic model with realistic income and wealth inequality, as well as occupational and sectoral heterogeneity. In the model, as in the data, economic exposure to the pandemic is strongly correlated with financial vulnerability, leading to very uneven economic losses across the population. We summarize our findings through a "distributional pandemic possibility frontier," which shows the distribution of economic welfare costs associated with the different aggregate mortality rates arising under alternative containment and fiscal strategies. For all combinations of health and economic policies we consider, the economic welfare costs of the pandemic are large and heterogeneous. Thus, the choice governments face when designing policy is not just between lives and livelihoods, as is often emphasized, but also over who should bear the burden of the economic costs. We offer a quantitative framework to evaluate both trade-offs. |
| Date: | 2020–09 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:15256&r= |
| By: | Borri, Nicola; Drago, Francesco; Santantonio, Chiara; Sobbrio, Francesco |
| Abstract: | In response to the Covid-19 outbreak, among other previous "non-pharmaceutical interventions'', on March 22, 2020 the Italian Government imposed an economic lockdown and ordered the closing of all non-essential economic activities. This paper estimates the causal effect of this measure on mortality by Covid-19 and on mobility patterns. The identification of the causal effect exploits the variation in the number of active workers across municipalities induced by the economic lockdown. The difference-in-difference empirical design compares outcomes in municipalities above and below the median variation in the share of active population before and after the lockdown within a province, also controlling for municipality-specific dynamics, daily-shocks at the provincial level and municipal unobserved characteristics. Our results show that the intensity of the economic lockdown is associated to a statistically significant reduction in mortality by Covid-19 and, in particular, for age groups between 30-64 and older. Back of the envelope calculations indicate that 4,793 deaths were avoided, in the 26 days between April 5 to April 30, in the 3,518 municipalities which experienced a more intense lockdown. Assuming linearity, a 1 percentage point reduction in the share of active population caused a 1.32 percentage points reduction in mortality by Covid-19. We also find that the economic lockdown, as expected, led to a reduction in human mobility. Several robustness checks corroborate our empirical findings. |
| Keywords: | Economic Lockdown; Excess Deaths; mobility |
| JEL: | H51 I10 I18 I30 |
| Date: | 2020–09 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:15317&r= |
| By: | Aum, Sangmin; Lee, Sang Yoon (Tim); Shin, Yongseok |
| Abstract: | Shutting down the workplace is an effective means of reducing contagion, but can incur large economic losses. We construct an exposure index, which measures infection risks across occupations, and a work-from-home index, which gauges the ease with which a job can be performed remotely across both industries and occupations. Because the two indices are negatively correlated but distinct, the economic costs of containing a pandemic can be minimized by only sending home those jobs that are highly exposed but easy to perform from home. Compared to a lockdown of all non-essential jobs, the optimal policy attains the same reduction in aggregate exposure (32 percent) with one-third fewer workers sent home (24 vs. 36 percent) and with only half the loss in aggregate wages (15 vs. 30 percent). A move from the lockdown to the optimal policy reduces the exposure of low-wage workers the most and the wage loss of the high-wage workers the most, although everyone's wage losses become smaller. A constrained optimal policy under which health workers cannot be sent home still achieves the same exposure reduction with a one-third smaller loss in aggregate wages (19 vs. 30 percent). |
| Keywords: | exposure; lockdown; Pandemic; work from home |
| JEL: | E24 I14 J21 |
| Date: | 2020–10 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:15332&r= |
| By: | Patricio Goldstein (Harvard University); Eduardo Levy Yeyati (Universidad Torcuato Di Tella/The Brookings Institution); Luca Sartorio (Universidad Torcuato Di Tella) |
| Abstract: | Non-Pharmaceutical Interventions (NPIs) have been for most countries the key policy instrument utilized to contain the impact of the COVID-19 pandemic. In this article, we conduct an empirical analysis of the impact of these policies on the virus’ transmission and death toll, for a panel of 152 countries, from the start of the pandemic through December 31, 2020. We find that lockdowns tend to significantly reduce the spread of the virus and the number of related deaths. We also show that this benign impact declines over time: after four months of strict lockdown, NPIs have a significantly weaker contribution in terms of their effect in reducing COVID-19 related fatalities. Part of the fading effect of quarantines could be attributed to an increasing non-compliance with mobility restrictions, as reflected in our estimates of a declining effect of lockdowns on measures of actual mobility. However, we additionally find that a reduction in de facto mobility also exhibits a diminishing effect on health outcomes, which suggests that lockdown fatigues may have introduce broader hurdles to containment policies. |
| Date: | 2021–02 |
| URL: | http://d.repec.org/n?u=RePEc:aoz:wpaper:35&r= |
| By: | Fetzer, Thiemo; Graeber, Thomas |
| Abstract: | Contact tracing has been a central pillar of the public health response to the COVID-19 pandemic. Yet, contact tracing measures face substantive challenges in practice and well-identified evidence about their effectiveness remains scarce. This paper exploits quasi-random variation in COVID-19 contact tracing. Between September 25 and October 2, 2020, a total of 15,841 COVID-19 cases in England (around 15 to 20% of all cases) were not immediately referred to the contact tracing system due to a data processing error. Case information was truncated from an Excel spreadsheet after the row limit had been reached, which was discovered on October 3. There is substantial variation in the degree to which different parts of England areas were exposed -- by chance -- to delayed referrals of COVID-19 cases to to the contact tracing system. We show that more affected areas subsequently experienced a drastic rise in new COVID-19 infections and deaths alongside an increase in the positivity rate and the number of test performed, as well as a decline in the performance of the contact tracing system. Conservative estimates suggest that the failure of timely contact tracing due to the data glitch is associated with more than 125,000 additional infections and over 1,500 additional COVID-19-related deaths. Our findings provide strong quasi-experimental evidence for the effectiveness of contact tracing. |
| Keywords: | Coronavirus; health |
| Date: | 2020–11 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:15494&r= |
| By: | Samuel de Haas (University of Giessen); Georg Goetz (University of Giessen); Sven Heim (Mines ParisTech) |
| Abstract: | Curfews present the most restrictive measure aiming to fight the spread of the COVID 19-pandemic. A somewhat weaker form are night time curfews. Night time curfews were imposed all over the world (e.g. USA, France, Germany or Argentina) and are still in force in many countries and have been even re-enforced recently in some countries. The public debate around night curfews is heated and evidence on their effectiveness is still scarce so far. Empirical evidence is the only way to reduce the emotionality in this discourse and to provide guidance for the decisions of policymaker. In this paper we estimate the impact of local night curfews in Hesse, the fifth most populous federal state in Germany, on the growth of incidences of COVID-19 cases during the "second wave" of the COVID-19 pandemic. Using this setup we take advantage of the fact that counties in Hesse had the same measures in place with the only difference that some additionally had to implement night curfews. This allows us to identify the effect of night curfews in isolation. We find no statistical evidence that night curfews were effective in slowing down the spread of the pandemic. |
| Keywords: | COVID-19, Night Curfew, Difference in Differences Analysis |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:mar:magkse:202118&r= |
| By: | Melosi, Leonardo; Rottner, Matthias |
| Abstract: | We study contact tracing in a new macro-epidemiological model in which infected agents may not show any symptoms of the disease and the availability of tests to detect asymptomatic spreaders is limited. Contact tracing is a testing strategy that aims to reconstruct the infection chain of newly symptomatic agents. We show that contact tracing may be insufficient to stem the spread of infections because agents fail to internalize that their individual consumption and labor decisions increase the number of traceable contacts to be tested in the future. Complementing contact tracing with timely, moderate lockdowns corrects this coordination failure, allowing policymakers to buy time to expand the testing scale so as to preserve the testing system. We provide theoretical underpinnings to the risk of becoming infected in macro-epidemiological models. Our methodology to reconstruct infection chains is not affected by curse-of-dimensionality problems. |
| Keywords: | Contact Tracing; Coordination failure; COVID-19; Epidemics; Externalities; infection chain; lockdown; Quarantine; SIR-macro model; Testing |
| JEL: | D62 E10 I10 |
| Date: | 2020–11 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:15482&r= |
| By: | Alemán, Christian; Busch, Christopher; Ludwig, Alexander; Santaeulàlia-Llopis, Raül |
| Abstract: | We develop a novel empirical approach to identify the effectiveness of policies against a pandemic. The essence of our approach is the insight that epidemic dynamics are best tracked over stages, rather than over time. We use a normalization procedure that makes the pre-policy paths of the epidemic identical across regions. The procedure uncovers regional variation in the stage of the epidemic at the time of policy implementation. This variation delivers clean identification of the policy effect based on the epidemic path of a leading region that serves as a counterfactual for other regions. We apply our method to evaluate the effectiveness of the nationwide stay-home policy enacted in Spain against the Covid-19 pandemic. We find that the policy saved 15.9% of lives relative to the number of deaths that would have occurred had it not been for the policy intervention. Its effectiveness evolves with the epidemic and is larger when implemented at earlier stages. |
| Keywords: | COVID-19; identification; Macroeconomics; Pandemic; Policy Effects; Stages; Stay-Home |
| JEL: | E01 E22 E25 |
| Date: | 2020–10 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:15390&r= |
| By: | Goller, Daniel (University of St. Gallen); Wolter, Stefan C. (University of Bern) |
| Abstract: | This study is, to the best of our knowledge, the first analysis of apprenticeship supply that allows us to analyse the effects of the shutdowns triggered by the COVID-19 pandemic before, during and after these shutdowns by means of daily searches for vacant apprenticeships. Analysing over 10 million search queries on the national administrative platform for apprenticeship offers from February 2020 until April 2021 we find a sharp reduction of up to 40% in the daily number of search queries associated to the first shutdown in March 2020, followed by some catch-up effect thereafter. Although we find a strong relationship between the intensity of the politically imposed restrictions due to the COVID-19 pandemic and daily search queries, this relationship weakens over time as the pandemic progresses. Finally, we find a large heterogeneity of effects, but all regions and occupational groups studied show a statistically significant negative effect of the measures on the search intensity for apprenticeships. |
| Keywords: | COVID-19, Switzerland, stringency index, apprenticeship |
| JEL: | I20 J22 |
| Date: | 2021–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp14345&r= |
| By: | Antràs, Pol; Redding, Stephen J.; Rossi-Hansberg, Esteban |
| Abstract: | We develop a model of human interaction to analyze the relationship between globalization and pandemics. Our framework provides joint microfoundations for the gravity equation for international trade and the Susceptible-Infected-Recovered (SIR) model of disease dynamics. We show that there are cross-country epidemiological externalities, such that whether a global pandemic breaks out depends critically on the disease environment in the country with the highest rates of domestic infection. A deepening of global integration can either increase or decrease the range of parameters for which a pandemic occurs, and can generate multiple waves of infection when a single wave would otherwise occur in the closed economy. If agents do not internalize the threat of infection, larger deaths in a more unhealthy country raise its relative wage, thus generating a form of general equilibrium social distancing. Once agents internalize the threat of infection, the more unhealthy country typically experiences a reduction in its relative wage through individual-level social distancing. Incorporating these individual-level responses is central to generating large reductions in the ratio of trade to output and implies that the pandemic has substantial effects on aggregate welfare, through both deaths and reduced gains from trade. |
| Keywords: | Globalization; Gravity Equation; Pandemics; SIR model |
| JEL: | F15 F23 I10 |
| Date: | 2020–09 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:15297&r= |
| By: | Fetzer, Thiemo |
| Abstract: | This paper documents that a large-scale government subsidy aimed at encouraging people to eat out in restaurants in the wake of the first 2020 COVID19 wave in the United Kingdom has had a large causal impact in accelerating the subsequent second COVID19 wave. The scheme subsidized 50% off the cost of food and non-alcoholic drinks for an unlimited number of visits in participating restaurants on Mondays-Wednesdays from August 3 to August 31, 2020. Areas with higher take-up saw both, a notable increase in new COVID19 infection clusters within a week of the scheme starting, and again, a deceleration in infections within two weeks of the program ending. Areas that exhibit notable rainfall during the prime lunch and dinner hours on days the scheme was active record lower infection incidence - a pattern that is also measurable in mobility data - and non-detectable on days during which the discount was not available or for rainfall outside the core lunch and dinner hours. A back of the envelope calculation suggests that the program is accountable for between 8 to 17 percent of all new local infection clusters during that time period. |
| Keywords: | consumer spending; Coronavirus; Externalities; health; Subsidies |
| Date: | 2020–10 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:15416&r= |
| By: | Burlina, Chiara; Rodríguez-Pose, Andrés |
| Abstract: | This paper examines the uneven geography of COVID-19-related excess mortality during the first wave of the pandemic in Europe, before assessing the factors behind the geographical differences in impact. The analysis of 206 regions across 23 European countries reveals a distinct COVID-19 geography. Excess deaths were concentrated in a limited number of regions -expected deaths exceeded 20% in just 16 regions- with more than 40% of the regions considered experiencing no excess mortality during the first six months of 2020. Highly connected regions, in colder and dryer climates, with high air pollution levels, and relatively poorly endowed health systems witnessed the highest incidence of excess mortality. Institutional factors also played an important role. The first wave hit regions with a combination of weak and declining formal institutional quality and fragile informal institutions hardest. Low and declining national government effectiveness, together with a limited capacity to reach out across societal divides, and a frequent tendency to meet with friends and family were powerful drivers of regional excess mortality. |
| Keywords: | COVID-19; Europe; institutions; Pandemic; regions |
| JEL: | H75 O43 R58 |
| Date: | 2020–11 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:15443&r= |
| By: | Simone Schüller; Hannah S. Steinberg |
| Abstract: | What are the effects of school and daycare facility closures during the COVID-19 pandemic on parental well-being and parenting behavior? Can emergency childcare policies during a pandemic mitigate increases in parental stress and negative parenting behavior? To answer these questions, this study leverages cross-state variation in emergency childcare eligibility rules during the first COVID-19 lockdown in Germany and draws on unique data from the 2019 and 2020 waves of the German AID:A family panel. Employing a DDD and IV approach we identify medium-term ITT and LATE effects and find that while emergency care policies did not considerably affect parents’ life satisfaction, partnership satisfaction or mental health, they have been effective in diminishing harsh parenting behavior. We find partly gendered effects, specifically on paternal parenting behavior. Our results suggest that decreasing parental well-being likely constitutes a general effect of the pandemic, whereas the observed increase in negative and potentially harmful parenting behavior is largely directly caused by school and daycare facility closures. |
| Keywords: | parental well-being, harsh parenting, Covid-19, policy evaluation, school and daycare closures, AID:A, difference-in-difference-in-differences, instrumental variable estimation |
| JEL: | D04 D13 I18 I31 J13 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_9077&r= |
| By: | Dhaval M. Dave; Joseph J. Sabia; Samuel Safford |
| Abstract: | During the first four months of 2021, the United States distributed approximately 250 million doses of COVID-19 vaccinations, which resulted in the complete vaccination of nearly 45 percent of the adult population. In the midst of this mass vaccination effort, Texas became the first state to abolish its statewide mask mandate and fully lift capacity constraints for all businesses. Governor Greg Abbott’s order was met with (i) concern by public health officials that an early reopening would lead to a resurgence of COVID-19, and (ii) assertions by Texas politicians that a reopening would generate short-run employment growth. This study provides the first empirical evidence on these claims. First, using daily anonymized smartphone data on social mobility from SafeGraph, Inc. — and synthetic control and difference-in-differences approaches — we find no evidence that the Texas reopening led to substantial changes in social mobility, including foot traffic at a wide set of business establishments in Texas. Second, using daily data on new COVID-19 cases from the New York Times, we find no evidence that the Texas reopening affected the rate of new COVID-19 cases during the five weeks following the reopening. Our null results persist across more urbanized and less urbanized counties, as well as across counties that supported Donald Trump and Joe Biden in the 2020 presidential election. Finally, we find no evidence that the Texas reopening order impacted short-run employment. Together, our null findings underscore the limits of late-pandemic era COVID-19 reopening policies to alter private behavior. |
| JEL: | H75 I18 |
| Date: | 2021–05 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:28804&r= |
| By: | Tsoulfidis, Lefteris; Tsaliki, Persefoni |
| Abstract: | In this article, we argue the rate of profit in combination with the movement of the real net profits determines the phase-change of the economy in its long cyclical pattern. Since WWII, the US and the world economy have experienced two such long cycles. The pandemic COVID-19 has deepened a recession that has been already underway since 2007. The growth rates in the first post-pandemic years are expected to be high; however, soon after, the economies will find themselves back to their old recessionary growth paths. The onset of a new long cycle requires the restoration of profitability, which can be sustained only through the introduction of ‘disruptive’ innovations backed by suitable institutional arrangements. |
| Keywords: | Long recession, secular stagnation, pandemic, long cycles, institutional changes, disruptive innovations |
| JEL: | B5 D33 E1 N12 O51 |
| Date: | 2021–05–09 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:107737&r= |
| By: | Davis, Steven J; Hansen, Stephen; Seminario-Amez, Cristhian |
| Abstract: | Firm-level stock returns differ enormously in reaction to COVID-19 news. We characterize these reactions using the Risk Factors discussions in pre-pandemic 10-K filings and two text-analytic approaches: expert-curated dictionaries and supervised machine learning (ML). Bad COVID-19 news lowers returns for firms with high exposures to travel, traditional retail, aircraft production and energy supply -- directly and via downstream demand linkages -- and raises them for firms with high exposures to healthcare policy, e-commerce, web services, drug trials and materials that feed into supply chains for semiconductors, cloud computing and telecommunications. Monetary and fiscal policy responses to the pandemic strongly impact firm-level returns as well, but differently than pandemic news. Despite methodological differences, dictionary and ML approaches yield remarkably congruent return predictions. Importantly though, ML operates on a vastly larger feature space, yielding richer characterizations of risk exposures and outperforming the dictionary approach in goodness-of-fit. By integrating elements of both approaches, we uncover new risk factors and sharpen our explanations for firm-level returns. To illustrate the broader utility of our methods, we also apply them to explain firm-level returns in reaction to the March 2020 Super Tuesday election results. |
| Date: | 2020–09 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:15314&r= |
| By: | Bisin, Alberto; Gottardi, Piero |
| Abstract: | In the context of an epidemic, a society is forced to face a complex system of externalities in consumption and in production. Command economy interventions can support Efficient allocations at the cost of severe information requirements. Competitive markets for infection rights (alternatively, Pigouvian taxes) can guarantee instead efficiency without requiring direct policy interventions on the activity of agents and firms. We demonstrate that this is the case also when the infections cannot be associated to the activities which originated them; and moral hazard then ensues. Finally, we extend the analysis to situations where governments have only incomplete information regarding the values of the parameters of the infection process or of firms' production processes. |
| Keywords: | Epidemic; Externalities; infection rights; Pigouvian Taxes |
| JEL: | D62 D82 H23 |
| Date: | 2020–10 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:15386&r= |
| By: | Dzung Bui (Philipps University Marburg); Lena Draeger (Leibniz University of Hannover); Bernd Hayo (Philipps University Marburg); Giang NghiemŸ (Leibniz University of Hannover) |
| Abstract: | In response to the economic crisis created by the COVID-19 pandemic, many governments provided financial assistance to households. Using representative consumer surveys conducted during the pandemic in 2020, we examine the effects of this fiscal policy instrument on households in two emerging economies, Vietnam and Thailand. Our paper contributes to the literature by studying consumer sentiment and durable spending responses to government financial support and the underlying transmission channels for these responses. We find that government support improves consumer sentiment and increases the likelihood of durable spending. Possible channels for these effects include more optimistic macroeconomic expectations and higher trust in the government's ability to deal with the pandemic, as well as less concern about the general impact of the crisis. We also find that financial support improves individuals' mental health and life satisfaction. Our results suggest that government financial support not only helps stimulate the economy but also enhances people's well-being more generally. |
| Keywords: | Fiscal policy; Financial support of households; Consumer sentiment; Durables spending; Expectations; Government trust; COVID-19; Thailand; Vietnam. |
| JEL: | E62 E71 D12 D83 H31 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:mar:magkse:202120&r= |