Health Insurance and Job Creation by the Self-Employed

Nearly half of all companies surveyed by the National Federation of Independent Business's Education Foundation reported that health insurance costs were a critical problem. States regulate health insurance by mandating minimum levels of certain benefits as part of policies offered. In this paper, we evaluate the impact of state health insurance mandates on job creation by small firms, using data from the Survey of Income and Program Participation for 1993-95. Results from an ordered probit regression indicate that the greater the number of mandates in a state, the lower the probability that a self-employed person will hire additional people. These results hold when we consider both the sum of mandates as well as a cost weighted measure of the most expensive mandates. The predicted probability of owning a business with at least one employee decreases by nearly 10 percentage points as the number of mandates increases from 0 to 16.

The Incidence of a U.S. Carbon Tax: A Lifetime and Regional Analysis

This paper measures the direct and indirect incidence of a carbon tax using current income and two measures of lifetime income to rank households. OUr results suggest that carbon taxes are more regressive when annual income is used as a measure of economic welfare that when proxies for lifetime income are used. Further, the direct component of the tax, in any given year, is significantly more regressive than the indirect component. In fact, for 1987, the indirect component of the tax is mildly progressive. We observe a modest shift over time with the direct component of carbon taxes becoming less regressive and the indirect component becoming more regressive. These effects mostly offset each other and the distribution of the total tax burden has not changed much over time. In addition we find that regional variation has fluctuated over the years of our analysis. By 2003 there is little systematic variation in carbon tax burdens across regions of the country.

The Incidence of a U.S. Carbon Tax: A Lifetime and Regional Analysis

This paper measures the direct and indirect incidence of a carbon tax using current income and two measures of lifetime income to rank households. Our results suggest that carbon taxes are more regressive when annual income is used as a measure of economic welfare than when proxies for lifetime income are used. Further, the direct component of the tax, in any given year, is significantly more regressive than the indirect component. In fact, for 1987, the indirect component of the tax is mildly progressive. We observe a modest shift over time with the direct component of carbon taxes becoming less regressive and the indirect component becoming more regressive. These effects mostly offset each other and the distribution of the total tax burden has not changed much over time. In addition we find that regional variation has fluctuated over the years of our anlaysis. By 2003 there is little systematic variation in carbon tax burdens across regions of the country.

Does Price Reveal Poor-Quality Drugs? Evidence from 17 Countries

Focusing on 8 drug types on the WHO-approved medicine list, we constructed an original dataset of 899 drug samples from 17 low- and median-income countries and tested them for visual appearance, disintegration, and analyzed their ingredients by chromatography and spectrometry. Fifteen percent of the samples fail at least one test and can be considered substandard. After controlling for local factors, we find that failing drugs are priced 13.6-18.7% lower than non-failing drugs but the signaling effect of price is far from complete, especially for non-innovator brands. The look of the pharmacy, as assessed by our covert shoppers, is weakly correlated with the results of quality tests. These findings suggest that consumers are likely to suspect low quality from market price, non-innovator brand and the look of the pharmacy, but none of these signals can perfectly identify substandard and counterfeit drugs. Indeed, many cheaper non-innovator products pass all quality tests, and are genuine generic drugs.

Distributional Impacts in a Comprehensive Climate Policy Package

This paper provides a simple analytic approach for measuring the burden of carbon pricing that does not require sophisticated and numerically intensive economic models but which is not limited to restrictive assumptions of forward shifting of carbon prices. We also show how to adjust for the capital income bias contained in the Consumer Expenditure Survey, a bias towards regressivity in carbon pricing due to underreporting of capital income in higher income deciles in the Survey. Many distributional analyses of carbon pricing focus on the uses-side incidence of carbon pricing. This is the differential burden resulting from heterogeneity in consumption across households. Once one allows for sources-side incidence (i.e. differential impacts of changes in real factor prices), carbon policies look more progressive. Perhaps more important than the findings from any one scenario, our results on the progressivity of the leading cap and trade proposals are robust to the assumptions made on the relative importance of uses and sources side heterogeneity.

The Impact of GILTI and FDII on the Investment Location Choice of U.S. Multinationals

This article analyzes the impact of two new international tax provisions, GILTI and FDII, passed under the Tax Cuts and Jobs Act, on U.S. multinational corporations’ location of new capital. We analyze whether these rules help retain internationally mobile rents within the U.S. tax base and the associated economic activity within the United States. Our analysis suggests that for a wide range of investment profiles (characterized in terms of scale and expected above-normal returns) for intangible capital, a U.S. MNC can do better by locating a new investment in the United States

Essays In Spatial Econometrics

Spatial econometrics is a subfield of econometrics that deals with the treatment of spatial interactions in regression models for cross sectional and panel data. Chapter 1: This is the first paper that highlights the role of spatial interactions, in the context of bankruptcy laws, in the entrepreneurship decision. This chapter is in two parts: one of which relates to the birth, and the other to the death, of businesses. The focus of the paper is on small businesses in the US. Small firms represent more than 90% of all enterprises and play a large role in entry and exit in the US. Further, the US has traditionally had pro-debtor bankruptcy laws. Hence this paper asks whether laws that facilitate easy exit, such as bankruptcy laws, are an important consideration in entry (and exit) of small businesses. This paper studies the decision of an entrepreneur to begin (or end) a business in a particular state, as a function of bankruptcy regulations and other business variables in that state as well as those in neighboring states. The study uses longitudinal household level data from the SIPP (Census) dataset. I estimate a random effects probit model with a lagged endogenous variable. The paper finds that higher bankruptcy exemptions in neighboring states lower the probability of starting a business in the state of residence. The bankruptcy exemption in one's own state has a significant and positive impact on entrepreneurship. Chapter II: This paper is a first attempt to empirically model determinants of FDI flows to emerging market economies, using a spatial approach. The paper uses data on FDI inflows to 29 emerging market and developing economies for the period 1980-2000. Apart from various country characteristics, we include a corruption perception index and an index of labor productivity as determinants of these flows. The unique contribution of this paper is to include a weighted average of these conditions in "neighbor countries" amongst factors that may explain FDI flows into a country. Results indicate that corruption perception and labor productivity, in both host and neighbor countries, significantly determine FDI inflows to a host country

Distributional Impacts in a Comprehensive Climate Policy Package

This paper provides a simple analytic approach for measuring the burden of carbon pricing that does not require sophisticated and numerically intensive economic models but which is not limited to restrictive assumptions of forward shifting of carbon prices. We also show how to adjust for the capital income bias contained in the Consumer Expenditure Survey, a bias towards regressivity in carbon pricing due to underreporting of capital income in higher income deciles in the Survey. Many distributional analyses of carbon pricing focus on the uses-side incidence of carbon pricing. This is the differential burden resulting from heterogeneity in consumption across households. Once one allows for sources-side incidence (i.e. differential impacts of changes in real factor prices), carbon policies look more progressive. Perhaps more important than the findings from any one scenario, our results on the progressivity of the leading cap and trade proposals are robust to the assumptions made on the relative importance of uses and sources side heterogeneity.