Might American deaths of despair spread to other developed countries? On the one hand, perhaps not. Parsing the data shows just how uniquely bleak the situation is in the United States. When it comes to deaths of despair, the United States is hopefully less a bellwether than a warning, an example for the rest of the world of what to avoid. On the other hand, there are genuine reasons for concern. Already, deaths from drug overdose, alcohol, and suicide are on the rise in Australia, Canada, Ireland, and the United Kingdom. Although those countries have better health-care systems, stronger safety nets, and better control of opioids than the United States, their less educated citizens also face the relentless threats of globalization, outsourcing, and automation that erode working-class ways of life throughout the West and have helped fuel the crisis of deaths of despair in the United States.
Why have so many young men withdrawn from the U.S. labor force since1965? This paper presents a model in which men invest time in employment to enhance their value as marriage partners. When the marriage market return on this investment declines, young men’s employment declines as well, in preparation for a less favorable marriage market. Taking this prediction to data, I show that fewer young men sought employment after 2 interventions that reduced the valueof gender-role-specialization within marriage: i) the adoption of unilateral divorce legislation, and ii) demand-driven improvements in women’s employment opportunities. I then show, using a structural estimation, that half of the employment effect of a labor market shock to men’s wages is determined by endogenous adjustment of the marriage market to the shock. These findings establish the changing marriage market as an important driver of decline in young men’s labor market involvement.
Long-Term Changes in Married Couples’ Labor Supply and Taxes: Evidence from the US and Europe Since the 1980s by Alexander Bick, Bettina Brüggemann, Nicola Fuchs-Schundeln, Hannah Paule-Paludkiewicz :: SSRNOctober 17, 2018
We document the time-series of employment rates and hours worked per employed by married couples in the US and seven European countries (Belgium, France, Germany, Italy, the Netherlands, Portugal, and the UK) from the early 1980s through 2016. Relying on a model of joint household labor supply decisions, we quantitatively analyze the role of non-linear labor income taxes for explaining the evolution of hours worked of married couples over time, using as inputs the full country- and year-specific statutory labor income tax codes. We further evaluate the role of consumption taxes, gender and educational wage premia, and the educational composition. The model is quite successful in replicating the time series behavior of hours worked per employed married woman, with labor income taxes being the key driving force. It does however capture only part of the secular increase in married women’s employment rates in the 1980s and early 1990s, suggesting an important role for factors not considered in this paper. We will make the non-linear tax codes used as an input into the analysis available as a user-friendly and easily integrable set of Matlab codes.
via Long-Term Changes in Married Couples’ Labor Supply and Taxes: Evidence from the US and Europe Since the 1980s by Alexander Bick, Bettina Brüggemann, Nicola Fuchs-Schundeln, Hannah Paule-Paludkiewicz :: SSRN
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.
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.
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.
Editor’s note: this paper focuses on undergraduate student loans but arguably the same logic/dynamic/perverse consequences may apply to medical student loans.
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.