nep-hea New Economics Papers
on Health Economics
Issue of 2013‒04‒13
34 papers chosen by
Yong Yin
SUNY at Buffalo

  1. A Regression-Based Medical Care Expenditure Index for Medicare Beneficiaries By Anne E. Hall; Tina Highfill
  2. Obesity and smoking: can we catch two birds with one tax? By D. Dragone; F. Manaresi; L. Savorelli
  3. On the Efficiency of Public Hospitals in Turkey* By Burcay Erus; Ozan Hatipoglu
  4. “Keep Government Out of My Medicare": The Elusive Search for Popular Support of Taxes and Social Spending By Lester, Gillian
  5. Using Performance Incentives to Improve Medical Care Productivity and Health Outcomes By Gertler, Paul; Vermeerch, Christel
  7. The Impact of Changes in Health Status: An Economywide Analysis for Australia By George Verikios; Peter B. Dixon; Maureen T. Rimmer; Anthony H. Harris
  8. Why it may hurt to be insured: the effects of capping coinsurance payments By Ed Westerhout; Kees Folmer
  9. Evaluating the effect of ownership status on hospital quality: the key role of innovative procedures By Gobillon, Laurent; Milcent, Carine
  10. Losing Heart? The Effect of Job Displacement on Health By Black, Sandra; Devereux, Paul J.; Salvanes, Kjell G
  11. Hospital competition with soft budgets By Brekke, Kurt Richard; Siciliani, Luigi; Straume, Odd Rune
  12. Competition, Equity and Quality in HealthCare By Halonen-Akatwijuka, Maija; Propper, Carol
  13. The Economic and Demographic Transition, Mortality, and Comparative Development By Cervellati, Matteo; Sunde, Uwe
  14. Does the market choose optimal health insurance coverage? By Boone, Jan
  15. Enrollment in community based health insurance schemes in rural Bihar and Uttar Pradesh, India By Panda, P.; Chakraborty, A.; Dror, D.M.; Bedi, A.S.
  16. Musn't Grumble: Immigration, Health and Health Service Use in the UK and Germany By Jonathan Wadsworth
  17. An Equilibrium Model of the African HIV/AIDS Epidemic By Jeremy Greenwood; Philipp Kircher; Cezar Santos; Michele Tertilt
  18. Switching costs in competitive health insurance markets By Lamiraud , Karine
  19. Pay-for-Performance Incentives in Low- and Middle-Income Country Health Programs By Grant Miller; Kimberly Singer Babiarz
  20. Environment, Health, and Human Capital By Joshua Graff Zivin; Matthew Neidell
  21. Informal Care and Inter-vivos Transfers: Results from the National Longitudinal Survey of Mature Women By Edward C. Norton; Lauren Hersch Nicholas; Sean Sheng-Hsiu Huang
  22. Does giving to charity lead to better health? Evidence from tax subsidies for charitable giving By Baris Yoruk
  23. Can technology help to reduce underage drinking? Evidence from the false ID laws with scanner provision By Baris Yoruk
  24. Do minimum legal tobacco purchase age laws work? By Ceren Ertan Yoruk; Baris Yoruk
  25. Public Health Insurance in Vietnam towards Universal Coverage: Identifying the challenges, issues, and problems in its design and organizational practices By Midori Matsushima; Hiroyuki Yamada
  26. Mutual Altruism: Evidence from Alzheimer Patients and Their Spouse Caregivers By König, Markus; Pfarr, Christian; Zweifel, Peter
  27. Gender Differences in Long Term Health Outcomes of Internal Migrants in Italy. By Vincenzo Atella; Partha Deb
  28. "An Econometric Analysis of Insurance Markets with Separate Identification for Moral Hazard and Selection" By Shinya Sugawara; Yasuhiro Omori
  29. The Health Consequences of Retirement By Michael Insler
  30. Do medical doctors respond to economic incentives? By Andreassen Leif; Di Tommaso Maria Laura; Strom Steinar
  31. Does the Identity of the Third-Party Payer Matters for Prescribing Doctors? By Morten Dalen Dag; Locatelli Marilena; Sorisio Enrico; Strom Steinar
  32. Explaining Health Care Expenditure Variation: Large-sample Evidence Using Linked Survey and Health Administrative Data By Randall P. Ellis; Denzil G. Fiebig; Meliyanni Johar; Glenn Jones; Elizabeth Savage
  33. The Equilibrium Dynamics of Economic Epidemiology By David Aadland; David Finnoff; Kevin x.d. Huang
  34. Why Do Americans Spend So Much More on Health Care than Europeans?--A General Equilibrium Macroeconomic Analysis By Hui He; Kevin x.d. Huang

  1. By: Anne E. Hall; Tina Highfill (Bureau of Economic Analysis)
    Date: 2013–03
  2. By: D. Dragone; F. Manaresi; L. Savorelli
    Abstract: The debate on tobacco taxes and fat taxes often treats smoking and eating as independent behaviors. However, since there exists medical and sociological evidence about the interdependence between eating and smoking choices, antismoking policies may also affect the obesity prevalence and fat taxes could influence smoking behavior. We address this issue from a theoretical standpoint and propose a dynamic rational model where eating and smoking are simultaneous choices that jointly affect body weight and addiction to smoking. Focusing on direct and cross price effects, we compare tobacco taxes and fat taxes and we show that a single policy tool can reduce both smoking and body weight. In particular, fat taxes can be more effective than tobacco taxes at simultaneously fighting obesity and smoking.
    JEL: D91 H31 I18
    Date: 2013–03
  3. By: Burcay Erus; Ozan Hatipoglu
    Date: 2013–08
  4. By: Lester, Gillian
    Keywords: Health Policy Analysis, Public Policy Analysis, General, Medicare, Taxation, Taxation Policy
    Date: 2012–12–14
  5. By: Gertler, Paul; Vermeerch, Christel
    Abstract: We nested a large-scale field experiment into the national rollout of the introduction of performance pay for medical care providers in Rwanda to study the effect of incentives for health care providers. In order to identify the effect of incentives separately from higher compensation, we held constant compensation across treatment and comparison groups – a portion of the treatment group’s compensation was based on performance whereas the compensation of the comparison group was fixed. The incentives led to a 20% increase in productivity, and significant improvements in child health. We also find evidence of a strong complementarity between performance incentives and baseline provider skill.
    Keywords: Health Services/Allied Health/Health Sciences, General, Public Health, Performance Incentives, Results-Based Financing, Pay-for-Performance, Child Health, Maternal and Child Services
    Date: 2013–02–12
  6. By: Janet Currie; Lucas Davis; Michael Greenstone; Reed Walker
    Abstract: A ubiquitous and largely unquestioned assumption in studies of housing markets is that there is perfect information about local amenities. This paper measures the housing market and health impacts of 1,600 openings and closings of industrial plants that emit toxic pollutants. We find that housing values within one mile decrease by 1.5 percent when plants open, and increase by 1.5 percent when plants close. This implies an aggregate loss in housing values per plant of about $1.5 million. While the housing value impacts are concentrated within ½ mile, we find statistically significant infant health impacts up to one mile away.
    Date: 2013–04
  7. By: George Verikios; Peter B. Dixon; Maureen T. Rimmer; Anthony H. Harris
    Abstract: We construct a dynamic, computable general equilibrium model of the Australian economy that incorporates a detailed representation of demographic and health trends of the labour force. We project the economywide effects of changes in the health status of the workforce associated with a change in chronic disease prevalence. Our results show that reductions in chronic disease and the associated rate of health decline of older workers have a much greater effect than similar reductions for younger workers. Traded sectors benefit much more than nontraded sectors, with a consequent improvement in the trade balance and a real depreciation of the exchange rate. The increase in workforce participation also decreases the capital-labour ratio and raises the returns to capital relative to labour.
    Keywords: chronic disease, computable general equilibrium, health status, labour supply
    JEL: C68 I15 J11
    Date: 2013–02
  8. By: Ed Westerhout; Kees Folmer
    Abstract: Most health insurance schemes use some sort of cost sharing to curb the moral hazard that is inherent to insurance. It is common to limit this cost sharing, by applying a deductible or a stop loss, for example. This can be motivated from an insurance perspective: without a cap, coinsurance payments might be unacceptably high for people with high medical costs. This paper shows that introducing a cap on coinsurance payments may actually <em>hurt</em> people with high medical costs. This is not due to moral hazard that comes along with the extra insurance. Instead, it is because the introduction of a cap makes health spending below the cap more price elastic, thereby inducing the health insurer to raise the coinsurance rate. <span style="font-family: Calibri; font-size: medium;">Keywords: </span>Moral Hazard, Deductibles, Co-Payment Schemes in Health Care, Idiosyncratic Health Shocks
    JEL: D60 H21 I18
    Date: 2013–03
  9. By: Gobillon, Laurent; Milcent, Carine
    Abstract: Mortality differences between university, non-teaching public and for-profit hospitals are investigated using a French exhaustive administrative dataset on patients admitted for heart attack. Our results show that innovative procedures play a key role in explaining the effect of ownership status on hospital quality. When age, sex, diagnoses and co-morbidities are held constant, the mortality rates in for-profit and university hospitals are similar, but they are lower than in public non-teaching hospitals. When additionally controlling for innovative procedures, the mortality rate is higher in for-profit hospitals than in the two groups of public hospitals. This suggests that the quality of care in for-profit hospitals relies on innovative procedures and that, after controlling for case-mix and innovative treatments, there is a better quality of care in public hospitals.
    Keywords: Hospital quality; Innovative procedures; Stratified duration model
    JEL: I12 I18
    Date: 2013–01
  10. By: Black, Sandra; Devereux, Paul J.; Salvanes, Kjell G
    Abstract: Job reallocation is considered to be a key characteristic of well-functioning labor markets, as more productive firms grow and less productive ones contract or close. However, despite its potential benefits for the economy, there are significant costs that are borne by displaced workers. We study how job displacement in Norway affects cardiovascular health using a sample of men and women who are predominantly aged in their early forties. To do so we merge survey data on health and health behaviors with register data on person and firm characteristics. We track the health of displaced and non-displaced workers from 5 years before to 7 years after displacement. We find that job displacement has a negative effect on the health of both men and women. Importantly, much of this effect is driven by an increase in smoking behavior. These results are robust to a variety of specification checks.
    Keywords: Employment and Health; Job Displacement
    JEL: I1 J6
    Date: 2013–01
  11. By: Brekke, Kurt Richard; Siciliani, Luigi; Straume, Odd Rune
    Abstract: We study the incentives for hospitals to provide quality and expend cost-reducing effoort when their budgets are soft, i.e., the payer may cover deficits or confiscate surpluses. The basic set up is a Hotelling model with two hospitals that differ in location and face demand uncertainty, where the hospitals run deficits (surpluses) in the high (low) demand state. Softer budgets reduce cost efficiency, while the effect on quality is ambiguous. For given cost efficiency, softer budgets increase quality since parts of the expenditures may be covered by the payer. However, softer budgets reduce cost-reducing effort and the profit margin, which in turn weakens quality incentives. We also find that profit confiscation reduces quality and cost-reducing effort. First best is achieved by a strict no-bailout and no-profit-confiscation policy when the regulated price is optimally set. However, for suboptimal prices a more lenient bailout policy can be welfare improving. When we allow for heterogeneity in costs and qualities, we also show that a softer budget can raise quality for high-cost patients (and therefore reduce 'skimping' on such patients).
    Keywords: Cost efficiency; Hospital competition; Quality; Soft budgets
    JEL: I11 I18 L13 L32
    Date: 2013–01
  12. By: Halonen-Akatwijuka, Maija; Propper, Carol
    Abstract: In this paper we focus on the implications of consumer heterogeneity for whether competition will improve outcomes in health care markets. We show that competition generally favours the majority group as higher quality for the majority is an effective way to increase the quality signal and attract patients. A regulator who is concerned about equity may protect the minority group by not introducing competition. Alternatively, if the minority group is favoured by the providers under monopoly, competition can improve equity by forcing the providers to increase quality for the majority group.
    Keywords: competition; equity; hospitals; quality
    JEL: D63 H11 I11 I14 L31
    Date: 2013–01
  13. By: Cervellati, Matteo; Sunde, Uwe
    Abstract: We propose a unified growth theory to investigate the mechanics generating the economic and demographic transition, and the role of mortality differences for comparative development. The framework can replicate the quantitative patterns in historical time series data and in contemporaneous cross-country panel data, including the bi-modal distribution of the endogenous variables across countries. The results suggest that differences in extrinsic mortality might explain a substantial part of the observed differences in the timing of the take-off across countries and the worldwide density distribution of the main variables of interest.
    Keywords: adult mortality; child mortality; comparative development; development traps; economic and demographic transition; heterogeneous human capital; quantitative analysis; unified growth model
    JEL: E10 J10 J13 N30 O10 O40
    Date: 2013–02
  14. By: Boone, Jan
    Abstract: Consumers, when buying health insurance, do not know the exact value of each treatment that they buy coverage for. This leads them to overvalue some treatments and undervalue others. We show that the insurance market cannot correct these mistakes. This causes research labs to overinvest in treatments that hardly add value compared to current best practice. The government can stimulate R&D in breakthrough treatments by excluding treatments with low value added from health insurance coverage. If the country is rich enough such a government intervention in a private health insurance market raises welfare.
    Keywords: cost effectiveness analysis; health insurance; pharmaceutical research and development
    JEL: D4 I18
    Date: 2013–04
  15. By: Panda, P.; Chakraborty, A.; Dror, D.M.; Bedi, A.S.
    Abstract: This paper assesses insurance uptake in three community based health insurance (CBHI) schemes located in rural parts of two of India’s poorest states and offered through women’s self-help groups (SHGs). We examine what drives uptake, the degree of inclusive practices of the schemes, and the influence of health status on enrollment. The most important finding is that a household’s socio-economic status does not appear to substantially inhibit uptake. In some cases Scheduled Caste/ Scheduled Tribe (SC/ST) households are more likely to enroll. Second, households with greater financial liabilities find insurance more attractive. Third, access to the hospital insurance scheme (RSBY) does not dampen CBHI uptake, suggesting that the potential for greater development of insurance markets and products beyond existing ones would respond to a need. Fourth, recent episodes of illness and selfassessed health status do not influence uptake. Fifth, insurance coverage is prioritized within households, with the household head, the spouse of the household head and both male and female children of the household head, more likely to be insured as compared to other relatives. Sixth, offering insurance through women’s SHGs appears to mitigate concerns about the inclusiveness and sustainability of CBHI schemes. Given the pan-Indian spread of SHGs, offering insurance through such groups offers the potential to scale-up CBHI.
    Keywords: community-based health insurance;Bihar;enrollment;Uttar Pradesh;health microinsurance;rural India;self-help groups
    Date: 2013–03–30
  16. By: Jonathan Wadsworth
    Abstract: A rise in population caused by increased immigration, is sometimes accompanied by concerns that the increase in population puts additional or differential pressure on welfare services which might affect the net fiscal contribution of immigrants. The UK and Germany have experienced significant increases in immigration in recent years. This study uses longitudinal data from both countries to examine whether immigrants differ in their use of health services compared to native born individuals, both on arrival and over time. While immigrants to Germany, but not the UK, are more likely to self-report poor health than the native-born population, the samples of immigrants in both countries use hospital and GP services at broadly the same rate as the native born populations. Controls for observed and unobserved differences between immigrants and native-born sample populations make little difference to these broad findings.
    Keywords: Immigration, Health, Health Service
    JEL: H00 J00
    Date: 2013
  17. By: Jeremy Greenwood (University of Pennsylvania); Philipp Kircher (University of Edinburgh); Cezar Santos (University of Mannheim); Michele Tertilt (University of Mannheim)
    Abstract: Eleven percent of the Malawian population is HIV infected. Eighteen percent of sexual encounters are casual. A condom is used one quarter of the time. A choice-theoretic general equilibrium search model is constructed to analyze the Malawian epidemic. In the developed framework, people select between different sexual practices while knowing the inherent risk. The analysis suggests that the efficacy of public policy depends upon the induced behavioral changes and general equilibrium effects that are typically absent in epidemiological studies and small-scale field experiments. For some interventions (some forms of promoting condoms or marriage), the quantitative exercise suggests that these effects may increase HIV prevalence, while for others (such as male circumcision or increased incomes) they strengthen the effectiveness of the intervention. The underlying channels giving rise to these effects are discussed in detail.
    Keywords: Bayesian learning, circumcision, condoms, disease transmission,HIV/AIDS, homo economicus, Malawi, marriage, policy intervention, sex markets, search, STDs
    JEL: D10 D50 E10 I10 O11
    Date: 2013–04
  18. By: Lamiraud , Karine (ESSEC Business School)
    Abstract: In this paper we investigate the possible presence of switching costs when consumers are offered the opportunity to change their basic health insurance provider. We focus on the specific case of Switzerland which implemented a pure form of competition in basic health insurance markets. We identify several barriers to switching, namely choice overload, status quo bias, the possession of supplementary contracts for enrollees in bad health, firm’s pricing strategies based on providing low price supplementary products, poor regulation of reserves and the limitations of the previous risk-equalization mechanism which left room for risk selection practices.
    Keywords: Brand loyalty; Choice overload; Competition among health insurers; Status quo bias; Supplementary health insurance; Switching costs; The Swiss case
    JEL: D41 G22
    Date: 2013–02
  19. By: Grant Miller; Kimberly Singer Babiarz
    Abstract: This chapter surveys experience with performance pay in developing country health programs. In doing so, it focuses on four key conceptual issues: (1) What to reward, (2) Who to reward, (3) How to reward, and (4) What unintended consequences might performance incentives create. We highlight that the use of performance pay has outpaced growth in corresponding empirical evidence. Moreover, very little research on performance incentives studies the underlying conceptual issues that we outline. We consider these to be important constraints in the design of better performance incentives.
    JEL: H51 I12 O12 O17
    Date: 2013–04
  20. By: Joshua Graff Zivin; Matthew Neidell
    Abstract: In this review, we discuss three major contributions economists have made to our understanding of the relationship between the environment and individual well-being. First, in explicitly recognizing how optimizing behavior, particularly in the form of residential sorting, can lead to non-random assignment of pollution, economists have employed a wide range of quasi-experimental techniques to develop causal estimates of the effect of pollution. Second, economic research has placed a considerable focus on the role of avoidance behavior, which is an important component for understanding the difference between biological and behavioral effects of pollution and for proper welfare calculations. Lastly, economic research has expanded the focus of analysis beyond traditional health outcomes to include measures of human capital, including labor supply, productivity, and cognition. Our review of the quasi-experimental evidence on this topic suggests that pollution does indeed have a wide range of effects on individual well-being, even at levels well below current regulatory standards. Given the importance of health and human capital as an engine for economic growth, these findings underscore the role of environmental conditions as an important factor of production.
    JEL: H23 H41 I12 J24 Q5
    Date: 2013–04
  21. By: Edward C. Norton; Lauren Hersch Nicholas; Sean Sheng-Hsiu Huang
    Abstract: Informal care is the largest source of long-term care for elderly, surpassing home health care and nursing home care. By definition, informal care is unpaid. It remains a puzzle why so many adult children give freely of their time. Transfers of time to the older generation may be balanced by financial transfers going to the younger generation. This leads to the question of whether informal care and inter-vivos transfers are causally related. We analyze data from the 1999 and 2003 waves of National Longitudinal Survey of Mature Women. We examine whether the elderly parents give more inter-vivos monetary transfers to adult children who provide informal care, by examining both the extensive and intensive margins of financial transfers and of informal care. We find statistically significant results that a child who provides informal care is more likely to receive inter-vivos transfers than a sibling who does not. If a child does provide care, there is no statistically significant effect on the amount of the transfer.
    JEL: I10
    Date: 2013–04
  22. By: Baris Yoruk
    Abstract: In the United States, charitable contributions can be deducted from taxable income making the price of giving inversely related to the marginal tax rate. The existing literature documents that charitable giving is very responsive to tax subsidies, but often ignores the spillover effects of such policies. On the other hand, a growing body of literature documents that giving to others reduces the stress and strengthens the immune system, which results in better health and longer life expectancy. These findings imply that tax subsidies for charitable giving may have positive spillover effects on health. This paper investigates this hypothesis using data from Center on Philanthropy Panel Study (COPPS), the philanthropy module of the Panel Study Income Dynamics (PSID). Understanding the spillover effects of charitable subsidies on health is quite important given the existing literature that links health status to several important economic outcomes. The results show that charitable subsidies have positive spillover effects on health. In particular, the implied cross-price elasticity of health index with respect to giving is -0.13. These results are robust to potential endogeneity of income and highlight the positive externalities created by tax subsidies for charitable giving.
    Date: 2013
  23. By: Baris Yoruk
    Abstract: Underage drinkers often use false identification to purchase alcohol or gain access into bars. In recent years, several states have introduced laws that provide incentives to retailers and bar owners who use electronic scanners to ensure that the customer is 21 years or older and uses a valid identification to purchase alcohol. This paper provides the first comprehensive analysis of the effects of these laws using confidential data from the National Longitudinal Survey of Youth, 1997 Cohort (NLSY97). Using a difference-in-differences methodology, I find that the false ID laws with scanner provision significantly reduce underage drinking, particularly in the short-run. The impact of these laws are more pronounced for 16 and 17 year olds. For this group, I find that these laws reduce the probability of engaging in binge drinking up to 12 percentage points. These results are robust to alternative model specifications and imply that stricter false ID laws may significantly reduce underage alcohol consumption.
    Date: 2013
  24. By: Ceren Ertan Yoruk; Baris Yoruk
    Abstract: This paper uses a regression discontinuity design to estimate the impact of the minimum legal tobacco purchase age (MLTPA) laws on smoking behavior among young adults. Using data from the confidential version of National Longitudinal Survey of Youth (1997 Cohort), which contains information on the exact birth date of the respondents, we find that the effect of the MLTPA on several indicators of smoking among youth is minor and often insignificant. However, we also show that granting legal access to cigarettes and tobacco products at the MLTPA leads to an increase in several indicators of smoking participation, including up to a 5 percentage point increase in the probability of smoking for males and for those who reported to have smoked before. These results are robust under several alternative model specifications and imply that policies that are designed to restrict youth access to tobacco are quite effective in reducing smoking participation among certain groups of young adults.
    Date: 2013
  25. By: Midori Matsushima (Assistant Professor, Osaka University of Commerce); Hiroyuki Yamada (Assistant Professor, Osaka School of International Public Policy (OSIPP))
    Abstract: Vietnam is attempting to achieve universal health insurance coverage by 2014. Despite great progress, the country faces some challenges, issues and problems. This paper reviewed official documents, existing reports, and related literature to address: (1) grand design for achieving universal health coverage, (2) current insurance coverage, (3) health insurance premium and subsidies by the government, (4) benefit package and payment rule, and (5) organizational practices. From the review, it became apparent that the insurance system is broadly speaking complex and there are huge ambiguities, which seems hindering universal coverage of health insurance. Also, hidden distorted incentives and lack of financial stability are the main challenges in the current public health insurance system in the country.
    Keywords: Health Insurance, universal coverage, Vietnam
    Date: 2013–03
  26. By: König, Markus; Pfarr, Christian; Zweifel, Peter
    Abstract: Background: Preferences of both Alzheimer patients and their spouse caregivers are related to a willingness-to-pay (WTP) measure which is used to test for the presence of mutual (rather than conventional unilateral) altruism. Methods: Contingent valuation experiments were conducted in 2000 – 2002, involving 126 Alzheimer patients and their caregiving spouses living in the Zurich metropolitan area (Switzerland). WTP values for three hypothetical treatments of the demented patient were elicited. The treatment Stabilization prevents the worsening of the disease, bringing dementia to a standstill. Cure restores patient health to its original level. In No burden, dementia takes its normal course while caregiver’s burden is reduced to its level before the disease. Results: The three different types of therapies are reflected in different WTP values of both caregivers and patients, suggesting that moderate levels of Alzheimer’s disease still permit clear expression of preference. According to the WTP values found, patients do not rank Cure higher than No burden, implying that their preferences are entirely altruistic. Caregiving spouses rank Cure before Burden, reflecting less than perfect altruism which accounts for some 40 percent of their to-tal WTP. Still, this constitutes evidence of mutual altruism. Conclusions: The evidence suggests that WTP values reflect individuals’ preferences even in Alzheimer patients. The values found suggest that an economically successful treatment should provide relief to caregivers, with its curative benefits being of secondary importance.
    Keywords: willingness-to-pay; dementia; altruism
    JEL: C93 D03 I10
    Date: 2013
  27. By: Vincenzo Atella (University of Rome "Tor Vergata"); Partha Deb (Hunter College and the Graduate Center)
    Abstract: This article examines the long term physical and mental health effects of internal migration. We use data from Italy that allows us to study a relatively unique migration experience from Southern and Northeastern regions of Italy to Northwestern ones and to the region around Rome concentrated over a relatively short period from 1950-1970. We distinguish between impacts on women and men and between "early" and "late" migrants. We use finite mixture models to account for heterogeneity in the effects of migration and find that there is a statistically significant and substantial improvement in physical and mental health for rural migrant females. In addition, for these women the effect can be attributed to better living conditions at the destination and not due to selection. Even with the finite mixture models, we find no evidence of migration-health effects for the later cohort, nor for males in the early cohort. Finally, we do not find evidence of selection effect.
    Keywords: Health status, Migration decisions, Finite Mixture models, Italy.
    JEL: C23 I11 L23
    Date: 2013–03–29
  28. By: Shinya Sugawara (Japan Society of Promotion of Science and Graduate School of Economics, University of Tokyo); Yasuhiro Omori (Faculty of Economics, University of Tokyo)
    Abstract: This paper proposes a simple microeconometric framework that can separately identify moral hazard and selection problems in insurance markets. Our econometric model is equivalent to the approach that is utilized for entry game analyses. We employ a Bayesian estimation approach that avoids a partial identification problem. Due to the standard identification, we propose a statistical model selection method to detect an information structure that consumers face. Our method is applied to the dental insurance market in the United States. In this market, we find not only standard moral hazard but also advantageous selection, which has an intuitive interpretation in the context of dental insurance.
    Date: 2013–03
  29. By: Michael Insler (United States Naval Academy)
    Abstract: This paper examines the impact of retirement on individuals' health. Declines in health commonly compel workers to retire, so the challenge is to disentangle the simultaneous causal effects. The estimation strategy employs an instrumental variables specification. The instrument is based on workers' self-reported probabilities of working past ages 62 and 65, taken from the first period in which they are observed. Results indicate that the retirement effect on health is beneficial and significant. Investigation into behavioral data, such as smoking and exercise, suggests that retirement may affect health through such channels; with additional leisure time, many retirees practice healthier habits.
    Date: 2013–03
  30. By: Andreassen Leif; Di Tommaso Maria Laura; Strom Steinar (University of Turin)
    Abstract: A longitudinal analysis of married physicians labor supply is carried out on Norwegian data from 1997 to 1999. The model utilized for estimation implies that physicians can choose among 10 different job packages which are a combination of part time/full time, hospital/primary care, private/public sector, and not working. Their current choice is influenced by past available options due to a taste persistence parameter in the utility function. In the estimation we take into account the budget constraint, including all features of the tax system. Our results imply that an overall wage increase or a tax cut moves married physicians towards full time job packages, in particular to full time jobs in the private sector. But the overall and aggregate labor supply elasticities in the population of employed doctors are rather low compared to previous estimates
    Date: 2012–04
  31. By: Morten Dalen Dag; Locatelli Marilena; Sorisio Enrico; Strom Steinar (University of Turin)
    Abstract: TNF-alpha inhibitors represent one of the most important areas of biopharmaceuticals by sales, with three blockbusters accounting for 8 per cent of total pharmaceutical sale in Norway. Novelty of the paper is to examine, with the use of a unique natural policy experiment in Norway, to what extent the price responsiveness of prescription choices is affected when the identity of the third-party payer changes. The three dominating drugs in this market, Enbrel, Remicade, and Humira, are substitutes, but have had different and varying funding schemes - hospitals and the national insurance plan. A stochastic structural model for the three drugs, covering demand and price setting, is estimated in a joint maximum likelihood approach. We find that doctors are more responsive when the costs are covered by the hospitals compared to when costs are covered by national insurance
    Date: 2012–04
  32. By: Randall P. Ellis (Department of Economics, Boston University); Denzil G. Fiebig (School of Economics, University of New South Wales); Meliyanni Johar (Economics Discipline Group, University of Technology, Sydney); Glenn Jones (Economics Discipline Group, University of Technology, Sydney); Elizabeth Savage (Economics Discipline Group, University of Technology, Sydney)
    Abstract: Explaining individual, regional, and provider variation in health care spending is of enormous value to policymakers, but is often hampered by the lack of individual level detail in universal public health systems because budgeted spending is often not attributable to specific individuals. Even rarer is selfreported survey information that helps explain this variation in large samples. In this paper, we exploit the linkage of a cohort-representative survey of 265,468 Australians age 45 and over to several years of hospital, medical and pharmaceutical records. After calculating total health care cost for each survey respondent, we examine health expenditures due to health shocks and those that are intrinsic to an individual. We find that high fixed-effects are positively associated with age, especially older males, poor health, obesity, smoking, cancer, stroke and heart conditions. Hospital admissions are the largest component of fixed effects. High time-varying expenditures are associated with speaking foreign language at home, low income and low education, suggesting greater exposure to adverse health shocks. For these individuals, health expenditure is comprised mainly of out-of-hospital medical services and drugs.
    Keywords: health expenditure; health insurance; risk adjustment; panel data
    JEL: I10 C23
    Date: 2012–05–01
  33. By: David Aadland (University of Wyoming); David Finnoff (University of Wyoming); Kevin x.d. Huang (Vanderbilt University)
    Abstract: In this paper we investigate the nature of rational expectations equilibria for economic epidemiological models. Unlike mathematical epidemiological models, economic epidemiological models can produce regions of indeterminacy or instability around the endemic steady states. We consider SI, SIS, SIR and SIRS versions of economic compartmental models and show how well-intentioned public policy may contribute to disease instability and uncertainty.
    Keywords: economic epidemiology, equilibria, dynamics, disease, indeterminacy, rational expectations
    JEL: D1 I1
    Date: 2013–03–25
  34. By: Hui He (Shanghai University of Finance and Economics); Kevin x.d. Huang (Vanderbilt University)
    Abstract: Empirical evidence suggests that both leisure time and medical care are important for maintaining health. We develop a general equilibrium macroeconomic model in which taxation is a key determinant of the composition of these two inputs in the endogenous accumulation of health capital. In our model, higher taxes lead to using relatively more leisure time and less medical care in maintaining health. We find that the difference in taxation can account for a large fraction of the difference in health expenditure-GDP ratio and almost all of the difference in time input for health production between the US and Europe.
    Keywords: Taxation, Time allocation, Health expenditure, Macroeconomics, General equilibrium
    JEL: E0 H0
    Date: 2013–03–25

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General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.