Public, Private or Both? Analyzing Factors Influencing the Labour Supply of Medical Specialists

May 9, 2018

This paper investigates the factors influencing the allocation of time between public and private sectors by medical specialists. A discrete choice structural labour supply model is estimated, where specialists choose from a set of job packages that are characterized by the number of working hours in the public and private sectors. The results show that medical specialists respond to changes in earnings by reallocating working hours to the sector with relatively increased earnings, while leaving total working hours unchanged. The magnitudes of the own‐sector and cross‐sector hours elasticities fall in the range of 0.16–0.51. The labour supply response varies by gender, doctor’s age and medical specialty. Family circumstances such as the presence of young dependent children reduce the hours worked by female specialists but not male specialists.

via Public, Private or Both? Analyzing Factors Influencing the Labour Supply of Medical Specialists by Terence Cheng, Guyonne R.J. Kalb, Anthony Scott :: SSRN

Childbearing Postponement, its Option Value, and the Biological Clock

May 5, 2018

Having children is like investing in a risky project. Postponing birth is like delaying an irreversible investment. It has an option value, which depends on its costs and benefits, and in particular on the additional risks motherhood brings. We develop a parsimonious theory of childbearing postponement along these lines. We derive its implications for asset accumulation, income, optimal age at first birth, and childlessness. The structural parameters are estimated by matching the predictions of the model to data from the National Longitudinal Survey of Youth NLSY79. The uncertainty surrounding income growth is shown to increase with childbearing, and this increase is stronger for more educated people. This effect alone can explain why the age at first birth and the childlessness rate both increase with education. We use the model to simulate two hypothetical policies. Providing free medically assisted reproduction technology does not affect the age at first birth much, but lowers the childlessness rate. Insuring mothers against income risk is powerful in lowering the age at first birth.

via Childbearing Postponement, its Option Value, and the Biological Clock by David de la Croix, Aude Pommeret :: SSRN

The Effects of Student Loans on the Provision and Demand for Higher Education

December 9, 2017

We characterize the outcomes of the tertiary education market in a context where borrowing constraints bind, there is a two-tier college system operating under monopolistic competition in which colleges differ by the quality offered and returns to education depend on the quality of the school attended. College quality, tuition prices, acceptance cut-offs and education demand are all determined in a general equilibrium model and depend on the borrowing constraints faced by households. Our main finding shows that subsidized student loan policies can lead to a widening gap in the quality of services provided by higher education institutions. This happens because the demand for elite institutions unambiguously increases when individuals can borrow. This does not happen in non-elite institutions, since relaxing borrowing constraints makes some individuals move from non-elite to elite institutions. The higher increase in demand for elite institutions allows them to increase prices and investment per student. As investment and average student ability are complementary inputs in the quality production function, elite universities also increase their acceptance cut-offs. In this new equilibrium, the differentiation of the product offered by colleges increases, where elite universities provide higher quality to high-ability students and non-elite universities offer lower quality to less-able students. We illustrate the main results through a numerical exercise applied to Colombia, which implemented massive student loan policies during the last decade and experienced an increase in the gap of quality of education provided by elite and non-elite universities. We show that the increase in the quality gap can be a by-product of the subsidized loan policies. Such results show that, when analyzed in a general equilibrium setting, subsidized loan policies can have regressive effects on the income distribution.

via The Effects of Student Loans on the Provision and Demand for Higher Education by Rodrigo Azuero, David Zarruk Valencia :: SSRN

Editor’s note: this paper focuses on undergraduate student loans but arguably the same logic/dynamic/perverse consequences may apply to medical student loans.

No ‘Honeymoon Phase’ – Whose Health Benefits from Retirement and When

December 9, 2017

I use a fixed effects instrumental variable approach to determine the effect retirement has on health. The exogenous variation in the probability to retire at the normal and early retirement age thresholds is exploited to instrument for the otherwise endogenous retirement decision. Six health aspects are considered: self-assessed health, depression, limitations in (instrumental) activities of daily living, mobility limitations, grip strength and number of words recalled. Using data for 10 countries from the Survey of Health, Retirement and Ageing in Europe (SHARE), I find that retiring both at the normal and early retirement eligibility ages significantly improves all health aspects, including the objective measure grip strength. Results do not generally support the theory that previous research was biased towards zero due to behavioral changes during the anticipation phase prior to retirement. Results also do not show the presence of a honeymoon phase directly following the start of retirement, in which individuals are believed to experience a euphoric state leading health improvements. It appears that individuals, especially blue collar workers, go through an adjustment period after retirement in which they experience more health problems, before stabilizing and improving. Overall, retirement has a health preserving effect for both genders and all occupations in the long term. Neither blue collar workers nor workers with physically or psychologically demanding jobs benefit more from retirement than others.

via No ‘Honeymoon Phase’ – Whose Health Benefits from Retirement and When by Birgit Leimer :: SSRN

The problem of doctors’ salaries

November 2, 2017

But an unavoidable part of the high cost of U.S. health care is how much we pay doctors — twice as much on average as physicians in other wealthy countries. Because our doctors are paid, on average, more than $250,000 a year (even after malpractice insurance and other expenses), and more than 900,000 doctors in the country, that means we pay an extra $100 billion a year in doctor salaries. That works out to more than $700 per U.S. household per year. We can think of this as a kind of doctors’ tax.

Source: The problem of doctors’ salaries

The Costs of and Net Returns to College Major by Joseph G. Altonji, Seth D. Zimmerman :: SSRN

January 21, 2017

This paper uses administrative student and expenditure data from Florida public universities to describe a) how the cost of producing graduates varies by major, b) how the inclusion of major-specific instructional costs alters the estimated net returns to different fields of study, and c) how major-specific instructional expenditures changed between 1999 and 2013. We find that the cost of producing graduates in the highest cost major (engineering) is roughly double that of producing graduates in low-cost majors, such as business. Cross-major comparisons of per graduate earnings returns net of costs differ from comparisons based on earnings outcomes alone in economically significant ways for a number of fields. Differences between net returns and earnings returns per dollar of instructional spending are even more pronounced. Our analysis of trends in instructional expenditures shows that per credit expenditures for undergraduate classes dropped by 16% in Florida universities between 1999 and 2013. The largest drops occurred in engineering and health, where per credit spending fell by more than 40%. Observed spending changes have little relationship with per credit costs or earnings outcomes.

Source: The Costs of and Net Returns to College Major by Joseph G. Altonji, Seth D. Zimmerman :: SSRN

Thinking of Incentivizing Care? The Effect of Demand Subsidies on Informal Caregiving and Intergenerational Transfers by Joan Costa-Font, Sergi Jimenez-Martin, Cristina Vilaplana :: SSRN

December 5, 2016

We still know little about what motivates the informal care arrangements provided in old age. The introduction of demand-side subsidies such as unconditional caregiving allowances (cash benefits designed either to incentivize the provision of informal care, or compensate for the loss of employment of informal caregivers) provide us with an opportunity to gain a further understanding of the matter. In this paper we exploit a quasi-natural experiment to identify the effects of the inception in 2007 (and its reduction in 2012) of a universal caregiving allowance on both the supply of informal care, and subsequent intergenerational transfer flows. We find evidence of a 30% rise in informal caregiving after the subsidy, and an increase (reduction) in downstream (upstream) intergenerational transfers of 29% (and 15%). Estimates were heterogeneous by income and wealth quantiles. Consistently, the effects were attenuated by a subsequent policy intervention; the reduction of the subsidy amidst austerity cuts in 2012.

Source: Thinking of Incentivizing Care? The Effect of Demand Subsidies on Informal Caregiving and Intergenerational Transfers by Joan Costa-Font, Sergi Jimenez-Martin, Cristina Vilaplana :: SSRN