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Working Paper
The Implications of a graying japan for government policy
Japan is in the midst of a demographic transition that is both rapid and large by international standards. As recently as 1990, Japan had the youngest population among the Group of 6 large, developed countries. However, the combined effects of aging of the baby boomer generation and low fertility rates have produced very rapid aging. Japan now finds itself with the oldest population among the Group of 6, and its population will continue to age at a rapid pace in future years. Aging is already placing a burden on government finances, and Japan's ability to confront the negative fiscal ...
Working Paper
Why Does Consumption Fluctuate in Old Age and How Should the Government Insure it?
In old age, consumption can fluctuate because of shocks to available resources and because health shocks affect utility from consumption. We find that even temporary drops in income and health are associated with drops in consumption and most of the effect of temporary drops in health on consumption stems from the reduction in the marginal utility from consumption that they generate. More precisely, after a health shock, richer households adjust their consumption of luxury goods because their utility of consuming them changes. Poorer households, instead, adjust both their necessary and luxury ...
Working Paper
Health Insurance as an Income Stabilizer
We evaluate the effect of health insurance on the incidence of negative income shocks using the tax data and survey responses of nearly 14,000 low income households. Us-ing a regression discontinuity (RD) design and variation in the cost of nongroup pri-vate health insurance under the Affordable Care Act, we find that eligibility for sub-sidized Marketplace insurance is associated with a 16% and 9% decline in the rates of unexpected job loss and income loss, respectively. Effects are concentrated among households with past health costs and exist only for “unexpected” forms of earnings ...
Report
Credit Frictions in the Great Recession
Although a credit tightening is commonly recognized as a key determinant of the Great Recession, to date, it is unclear whether a worsening of credit conditions faced by households or by firms was most responsible for the downturn. Some studies have suggested that the household-side credit channel is quantitatively the most important one. Many others contend that the firm-side channel played a crucial role. We propose a model in which both channels are present and explicitly formalized. Our analysis indicates that the household-side credit channel is quantitatively more relevant than the ...
Journal Article
The Aggregate and Relative Economic Effects of Government Financed Health Care
Government‐financed health care expenditures, through Medicare and Medicaid, have grown from roughly 0% to over 7.6% of national personal income over the past 50 years. This paper investigates the stimulative effects of Medicare spending. Using an annual, state‐level panel, we regress state income growth on own‐state spending and spending in other states, instrumented by unanticipated shocks to aggregate Medicare spending, to estimate local and spillover effects. In our benchmark specification, the own‐spending multiplier equals 1.3 and the spillover multiplier equals 0.4. The total ...
Working Paper
Health Insurance and Hospital Supply: Evidence from 1950s Coal Country
The United States government spends billions on public health insurance and has funded a number of programs to build health care facilities. However, the government runs these two types of programs separately: in different places, at different times, and for different populations. We explore whether access to both health insurance and hospitals can improve health outcomes and access to health care. We analyze a coal mining union health insurance program in 1950s Appalachia with and without a complementary hospital construction program. Our results show that the union insurance alone increased ...
Identifying Information Gaps to Help Communities Navigate Lead Service Line Replacement
In response to state and federal policy changes, communities across the United States have been developing strategies to undertake the large-scale and complex process of replacing millions of lead service lines (LSLs). These lead pipes supply drinking water to homes and risk exposing households to lead, which can have long-term repercussions for a child’s development and cause chronic health issues in an adult. The challenge of replacing LSLs is felt acutely in the heart of the Midwest—home to the Federal Reserve Bank of Chicago’s Seventh District, which comprises all of Iowa and most ...
Convening Identifies Key Resources for Communities Replacing Lead Service Lines
Communities across the United States are beginning to map and replace lead service lines (LSLs) to comply with new state and federal safe drinking water policies aimed at reducing the risk of lead exposure through drinking water.1 The states in the Federal Reserve Bank of Chicago’s Seventh District—Illinois, Indiana, Iowa, Michigan, and Wisconsin—are estimated to have over 2 million lead pipes, according to a September 2023 report to Congress by the U.S. Environmental Protection Agency’s (EPA) Office of Water; Illinois and Wisconsin rank among the top ten states with the most lead ...
Report
On Financing Retirement, Health Care, and Long-Term Care in Japan
Japan is facing the problem of how to finance retirement, health care, and long-term care expenditures as the population ages. This paper analyzes the impact of policy options intended to address this problem by employing a dynamic general equilibrium overlapping generations model, specifically parameterized to match both the macro- and microeconomic level data of Japan. We find that financing the costs of aging through gradual increases in the consumption tax rate delivers better macroeconomic performance and higher welfare for most individuals relative to other financing options, including ...
Working Paper
Closing the Gap: The Impact of the Medicaid Primary Care Rate Increase on Access and Health
The difficulties that Medicaid beneficiaries face accessing medical care are often attributed to the program?s low reimbursement rates relative to other payers. There is little evidence, however, as to the actual effects of Medicaid payment rates for providers on access and health outcomes for beneficiaries. In this paper, we exploit time-series variation in Medicaid reimbursement rates primarily driven by the Medicaid fee bump?a provision of the Affordable Care Act mandating that states raise Medicaid payments to match Medicare rates for primary care visits for 2013 and 2014?to quantify the ...