Private Provision of Social Insurance: Drug-Specific Price Elasticities and Cost Sharing in Medicare Part D

By Liran Einav, Amy Finkelstein, and Maria Polyakova

American Economic Journal: Economic Policy, August 2018

We explore how private drug plans set cost sharing in the context of Medicare Part D. While publicly provided drug coverage typically involves uniform cost sharing across drugs, we document substantial heterogeneity in the cost sharing for different drugs...

Strategic Formulary Design in Medicare Part D Plans

By Kurt Lavetti and Kosali Simon

American Economic Journal: Economic Policy, August 2018

The design of Medicare Part D causes most beneficiaries to receive fragmented health insurance, with drug and medical coverage separated. Fragmentation is potentially inefficient since separate insurers optimize over only one component of healthcare spend...

Consumer Valuation of Fuel Costs and Tax Policy: Evidence from the European Car Market

By Laura Grigolon, Mathias Reynaert, and Frank Verboven

American Economic Journal: Economic Policy, August 2018

To what extent do car buyers undervalue future fuel costs, and what does this imply for tax policy? To address both questions, we show it is crucial to account for consumer mileage heterogeneity. We use product-level data for a panel of European countries...

Can Online Off-the-Shelf Lessons Improve Student Outcomes? Evidence from a Field Experiment

By Kirabo Jackson and Alexey Makarin

American Economic Journal: Economic Policy, August 2018

Many websites now warehouse instructional materials designed to be taught by teachers in a traditional classroom. What are the potential benefits of the new resources? We analyze an experiment in which we randomly give middle school math teachers access t...

Does Managed Care Widen Infant Health Disparities? Evidence from Texas Medicaid

By Ilyana Kuziemko, Katherine Meckel, and Maya Rossin-Slater

American Economic Journal: Economic Policy, August 2018

Medicaid programs increasingly finance competing, capitated managed care plans rather than administering fee-for-service (FFS) programs. We study how the transition from FFS to managed care affects high- and low-cost infants (blacks and Hispanics, respect...

The Effect of Public Pension Wealth on Saving and Expenditure

By Marta Lachowska and Michał Myck

American Economic Journal: Economic Policy, August 2018

This paper examines the degree of substitution between public pension wealth and private saving by studying Poland's 1999 pension reform. The analysis identifies the effect of pension wealth on private saving using cohort-by-time variation in pension weal...

The Impact of Financial Education on Adolescents' Intertemporal Choices

By Melanie Lührmann, Marta Serra-Garcia, and Joachim Winter

American Economic Journal: Economic Policy, August 2018

We study the impact of financial education on intertemporal choice in adolescence. The educational program was randomly assigned among high school students, and choices were measured using an incentivized experiment. Students who participated in the progr...

Projections and Uncertainties about Climate Change in an Era of Minimal Climate Policies

By William Nordhaus

American Economic Journal: Economic Policy, August 2018

Climate change remains one of the major international environmental challenges facing nations. Up to now, nations have adopted minimal policies to slow climate change. Moreover, there has been no major improvement in emissions trends as of the latest data...

Multimarket Contact in the Hospital Industry

By Matt Schmitt

American Economic Journal: Economic Policy, August 2018

Hospitals in the United States increasingly belong to multihospital systems that operate in numerous geographic markets. A large literature in management and economics suggests that competition between firms may be softened as a result of multimarket cont...

Trickle-Down Ethnic Politics: Drunk and Absent in the Kenya Police Force (1957-1970)

By Oliver Vanden Eynde, Patrick M. Kuhn, and Alexander Moradi

American Economic Journal: Economic Policy, August 2018

How does ethnic politics affect the state's ability to provide policing services? Using a panel of administrative personnel data on the full careers of 6,784 police officers, we show how the rise of ethnic politics around Kenya's independence influenced p...

Front Matter

American Economic Review, August 2018

Firms, Informality, and Development: Theory and Evidence from Brazil

By Gabriel Ulyssea

American Economic Review, August 2018

This paper develops and estimates an equilibrium model where heterogeneous firms can exploit two margins of informality: (i) not register their business, the extensive margin; and (ii) hire workers "off the books," the intensive margin. The model encompas...

Do Larger Health Insurance Subsidies Benefit Patients or Producers? Evidence from Medicare Advantage

By Marika Cabral, Michael Geruso, and Neale Mahoney

American Economic Review, August 2018

A central question in the debate over privatized Medicare is whether increased government payments to private Medicare Advantage (MA) plans generate lower premiums for consumers or higher profits for producers. Using difference-in-differences variation br...

Aggregate Recruiting Intensity

By Alessandro Gavazza, Simon Mongey, and Giovanni L. Violante

American Economic Review, August 2018

We develop an equilibrium model of firm dynamics with random search in the labor market where hiring firms exert recruiting effort by spending resources to fill vacancies faster. Consistent with microevidence, fast-growing firms invest more in recruiting ...

Innovation and Production in the Global Economy

By Costas Arkolakis, Natalia Ramondo, Andrés Rodríguez-Clare, and Stephen Yeaple

American Economic Review, August 2018

We develop a quantifiable general equilibrium model of trade and multinational production (MP) in which countries can specialize in innovation or production. Home market effects or comparative advantage leads some countries to specialize in innovation and...

Government Old-Age Support and Labor Supply: Evidence from the Old Age Assistance Program

By Daniel K. Fetter and Lee M. Lockwood

American Economic Review, August 2018

Many government programs transfer resources to older people and implicitly or explicitly tax their labor. We shed new light on the labor supply and welfare effects of such programs by investigating the Old Age Assistance Program (OAA). Exploiting the larg...

Endogenous Disasters

By Nicolas Petrosky-Nadeau, Lu Zhang, and Lars-Alexander Kuehn

American Economic Review, August 2018

Market economies are intrinsically unstable. The standard search model of equilibrium unemployment, once solved accurately with a globally nonlinear algorithm, gives rise endogenously to rare disasters. Intuitively, in the presence of cumulatively large n...

Marking to Market versus Taking to Market

By Guillaume Plantin and Jean Tirole

American Economic Review, August 2018

Building on the idea that accounting matters for corporate governance, this paper studies the equilibrium interaction between the measurement rules that firms find privately optimal, firms' governance, and the liquidity in the secondary market for their a...

Inference in Regression Discontinuity Designs with a Discrete Running Variable

By Michal Kolesár and Christoph Rothe

American Economic Review, August 2018

We consider inference in regression discontinuity designs when the running variable only takes a moderate number of distinct values. In particular, we study the common practice of using confidence intervals (CIs) based on standard errors that are clustere...

Fiscal Rules and Discretion in a World Economy

By Marina Halac and Pierre Yared

American Economic Review, August 2018

Governments are present-biased toward spending. Fiscal rules are deficit limits that trade off commitment to not overspend and flexibility to react to shocks. We compare coordinated rules, chosen jointly by a group of countries, to uncoordinated rules. If...