PROHIBITION VERSUS TAXATION: RECONSIDERING THE LEGAL DRINKING AGE

The legal drinking age targets a group at a high risk of alcohol-related problems. This paper argues that taxation could achieve the same benefits as the legal drinking age at a substantially lower social cost. Existing empirical research suggests that simultaneously lowering the legal age to 18 and taxing alcohol purchases at between 12 to 86 percent of the current price would achieve the same results as the current legal age. Levying a special teen tax only on young adults would minimize its social costs. Teen tax revenues between $564 million to $4.03 billion measure the net social gain of replacing the current prohibition on young adults' alcohol purchases with a taxation policy.     

DO MINIMUM LEGAL TOBACCO PURCHASE AGE LAWS WORK?

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 impact of the MLTPA on several indicators of smoking among youth is moderate but often statistically insignificant. However, for those who reported to have smoked before, we 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. These results imply that policies that are designed to restrict youth access to tobacco may only be effective in reducing smoking behavior among certain groups of young adults. (JEL I10, I18, I19)     

Legal access to alcohol and automobile accidents: Potential interactive effects of alcohol and drug consumption

The combination of drugged and drunk driving is an important policy topic as some states and countries have liberalized prohibitions on substance use to varying degrees. In this study, we analyze the effect of legal access to alcohol on suspected drug impaired accidents. We find that accidents with suspected drug impairment significantly increase when a driver gains legal access to alcohol at age 21. Our findings suggest that even if alcohol and drug consumption are substitutes, as much of the literature suggests, potential interactive effects may offset the reduction in decreased alcohol consumption from drugs.     

BINGE DRINKING IN COLLEGE: THE IMPACT OF PRICE, AVAILABILITY, AND ALCOHOL CONTROL POLICIES

This paper estimates the effects of beer prices, alcohol availability, and policies related to driving under the influence of alcohol on drinking and binge drinking among youths and young adults. Data are from a nationally representative survey of students in U.S. colleges and universities. Separate estimates are obtained for underage male and female students, as well as for older male and female students. The estimates indicate that the drinking practices of male college students are generally insensitive to the price of beer. However, underage drinking and binge drinking by female students do respond significantly to price, although both are relatively inelastic. The results also show that strong drunk driving policies targeting youths and young adults significantly reduce drinking and binge drinking by male students. Similarly, these policies reduce drinking among female college students but appear to have little impact on their binge drinking. Instead, the results indicate that many elements of campus life (including participation in a fraternity or sorority, living on campus, and the ready availability of alcoholic beverages) are among the most important determinants of drinking and binge drinking among college students.     

YOUTH ALCOHOL USE AND PUBLIC POLICY

This paper examines the frequencies of youth drinking and heavy drinking in 1982 and 1989 and separately examines the effects of minimum legal drinking ages and beer excise taxes for each year. In both years, drinking is responsive to price changes resulting from higher excise taxes. However, the price sensitivity of youth alcohol use fell after states changed to a uniform minimum legal drinking age of 21 .     

THE IMPACT OF LARGE CONTAINER BEER PURCHASES ON ALCOHOL‐RELATED FATAL VEHICLE ACCIDENTS

Using a fixed effect weighted least square model, we examine how changes in the share of beer purchases from large containers (>12 oz.) impact alcohol‐related fatal accidents. We find that, after holding beer purchases and overall alcohol‐consumption constant, an increase in total beer purchases from containers greater than the standard size of 12 oz. increases alcohol‐related fatal accidents. We confirm our results persist across several investigations of robustness, as well as the use of instrument variables methods. Outcomes suggest that policy makers should consider differential excise taxes for the purchase of larger than standard size beer containers. Such a policy would likely reduce the number of alcohol‐related fatal vehicle crashes and help to internalize the negative externalities associated with drunk driving. At the very minimum, these results suggest that individuals prone to dangerous levels of drunk driving are the consumers that most prefer large container size consumption. This is consistent with the idea that binge drinkers and beer drinkers are much more likely to drive while legally intoxicated. (JEL I18, K4)     

DEMAND FOR AND REGULATION OF CARDIAC SERVICES*

Centralization of cardiac services can increase hospital surgery volumes and decrease access for patients. This study estimates the effects of changes in the regulation of cardiac services on treatments, mortality, and utility. Demand for surgery services by heart attack victims who form expectations of the need for and productivity of surgery in their choice of hospital and treatment is estimated. The results indicate that mortality and ex ante utility are insensitive to moderate changes in policy: Changes in surgery volume and travel costs offset one another. Despite similar health outcomes, the competing policies have different implications for taxpayers.     

THE PECULIAR ECONOMICS OF HOUSING BUBBLES

Home values increase rapidly during housing bubbles generating large capital gains. High loan‐to‐value (LTV) mortgages secured by expected future home values are one way to take advantage of these capital gains. In this article, we use a simple partial equilibrium consumer theory model to explore the implications of high LTV borrowing. We find that sufficiently large expected house price growth leads to an upward‐sloping budget line when households can obtain high LTV mortgages. In this environment, the demand for housing fits neither the conventional theories of consumer goods nor that of investment goods. In fact, increases in the expected future price of housing may reduce current housing demand, whereas decreases in the effective (current) price may lead to households buying smaller homes. Moreover, high LTV loans reduce the effectiveness of monetary policy, but raise the volatility of aggregate demand. Tighter borrowing standards may help lower demand volatility at the expense of shrinking the economy. (JEL E21, R21, E52)     

The Impact of the German Child Benefit on Household Expenditures and Consumption

The German Child Benefit (‘Kindergeld’) is paid to legal guardians of children as a cash benefit. The benefit does not depend on household income or other household characteristics. I use exogenous variations in the amount of child benefit received by households in the German Socio‐Economic Panel to estimate the impact of a given change in the child benefit on food expenditures of households, the probability of owning a home, rent per square meter, measures of the size of the home, as well as parents’ smoking behavior and parents’ alcohol consumption. Households primarily increase per capita food expenditures in response to increases in child benefit, and they also improve housing conditions. The effect of child benefit on per capita food expenditures is larger for low‐income households compared to high‐income households. I do not find a significant effect of child benefit on parents’ smoking or drinking.     

THE POLITICS OF PRECOMMITMENT WITH ELECTORAL UNCERTAINTY AND TRANSACTION COSTS

Despite the lack of legal channels through which binding commitments can be made by the government, economic and political factors enable it to affect future outcomes. In practice, large transaction costs are associated with any significant change of policy, and therefore the current government can adopt policies so that certain outcomes are more likely to be realized by its successor. In this paper it is argued that transaction costs combined with electoral uncertainty are likely to drive the current government to adopt a policy which is extreme relative to the preferences of the existing political parties. This policy is adopted in order to ensure that due to transaction costs, the future government will not depart radically from the most preferred policy of the current government. If the current policy is likely to affect the election outcome, then, in addition to the above considerations, the electorate attitudes would have to be taken into account by the government. Hence, the current government confronts two factors in choosing its policies: the behavior of the future government and the behavior of the electorate. The interplay between the two factors determines the choice of the current policy.     

STILL “SAVING BABIES”? THE IMPACT OF CHILD MEDICAID EXPANSIONS ON HIGH SCHOOL COMPLETION RATES

The decoupling of child Medicaid from the cash welfare system greatly increased access to public health insurance for low‐income children in the United States. In this paper, I show that the federally mandated public health insurance expansions of the late‐1980s and early‐1990s significantly increased the number of public high school completers in the 2000s. Using the legislated generosity of a state's child Medicaid program as a time‐varying, exogenous source of variation in a quasi‐experimental design, I find substantively large declines in the dropout rate and, importantly, large increases in traditional 4‐year graduation rates. Results for both measures are driven by Hispanic and White students, the two groups experiencing the greatest within‐group increases in eligibility due to the decoupling of child Medicaid from the Aid to Families with Dependent Children program. In addition, I find evidence that increases in the length of childhood years covered (e.g., through age 5 vs. through age 17) leads to greater gains in completion rates. This suggests that public health insurance coverage throughout childhood produces the largest effect. (JEL C23, H51, H52, H75, I21)     

Macroeconomic policy lessons of labor market frictions

The paper explores the consequences of macroeconomic policy for labor market outcomes in the presence of frictions. It shows how policy may be useful in over-riding frictions, as well as how it might generate adverse outcomes. A partial-equilibrium, empirically grounded model is used to simulate policy effects.The key results are that policy has effects on the stochastic behavior of key variables - measures that reduce unemployment also reduce its persistence and increase the volatility of vacancies. Hiring subsidies and unemployment benefits have substantial effects on labor market outcomes, while employment subsidies or wage tax reductions are not very effective policy instruments.     

THE EFFECTS OF YOUNG ADULT‐DEPENDENT COVERAGE AND CONTRACEPTION MANDATES ON YOUNG WOMEN

This research investigates two features of the Affordable Care Act that especially affect young adults, the young adult‐dependent coverage (YAD) mandate and the requirement to cover contraception (CM). Both mandates were first enacted at the state level but have been studied only in isolation. We estimate a wide range of models allowing these mandates to have joint effects on insurance coverage, health‐care access, health outcomes and fertility. We provide new evidence that helps settle the mixed findings from past state‐level YAD and CM research and suggests the two mandates may combine to improve the well‐being of young adults. (JEL I18, I12, H75)     

MEASURING HEALTH INSURANCE BENEFITS: THE CASE OF PEOPLE WITH DISABILITIES

Since 2012, the Congressional Budget Office has included an estimate of the market value of government‐provided health insurance coverage in its measures of household income. We follow this practice for both public and private health insurance to capture the impact of greater access to government‐provided health insurance for working‐age people with disabilities, whose market value rose in 2010 dollars from $11.7 billion in 1980 to $114.3 billion in 2012. We then consider the more general implications of incorporating estimates of the market price of insurance, equivalent to that provided by the government, into policy analyses in a post‐Affordable Care Act world. (JEL D31, H24, I18, J31)     

Unveiling the effects of a headscarf ban: Evidence from municipal jobs in Turkey

Religious conservatism is often associated with patriarchal attitudes and deterioration of women’s rights. This conventional wisdom has motivated ubiquitous policies that limit public expressions of religion and emphasize secular values. This paper demonstrates that a policy change which undermines secularity ends up empowering women. The current article takes advantage of a unique divergence in political institutions that occurred in Turkey’s recent history to explore how revoking a headscarf ban affected employment outcomes of women in the public sector. In a difference-in-discontinuities setting, I exploit the before/after discontinuous policy variation and compare female employment within municipalities that have Islamist and secular mayors. I find that eliminating legal obstacles against observant Muslim women in the labor market improves female employment in Islamist municipalities. Yet, when women are not allowed to wear headscarves to work, Islamist mayors employ less women vis-à-vis secular mayors. Overall, findings point to unintended consequences of headscarf bans on pious women.     

Are There Differential Effects of Price and Policy on College Students’Drinking Intensity?

This article investigates the impact of campus bans on alcohol use and the price of alcohol on college students'drinking intensity. The impact of a campus ban on drinking appears to depend on the ability of students to substitute off-campus access to alcohol for on-campus access. Where few off-campus alternatives exist, campus bans reduce the odds that a student becomes a heavy drinker but have no impact on the odds of transitioning from abstainer to drinker. Where off-campus alternatives are more plentiful, campus bans are less effective. Increasing the price of alcohol appears to be equally effective at reducing the likelihood of drinking and heavy drinking. (JEL)     

UNANTICIPATED EFFECTS OF CALIFORNIA'S PAID FAMILY LEAVE PROGRAM

We examine the effect of California paid family leave (CPFL) on young women's labor force participation and unemployment, relative to men and older women. CPFL enables workers to take at most 6 weeks of paid leave over a 12‐month period in order to bond with new born or adopted children, or to care for sick family members or ailing parents. The policy benefits women, especially young women, as they are more prone to take such a leave. However, the effect of the policy on overall labor market outcomes is less clear. We apply difference‐in‐difference techniques to identify the effects of the CPFL legislation on young women's labor force participation and unemployment. We find that the labor force participation rate, the unemployment rate, and the duration of unemployment among young women rose in California compared to men (particularly young men) and older women in California, and to other young women, men, and older women in states that did not adopt PFL. The latter two findings regarding higher young women's unemployment and unemployment duration are unanticipated effects of the CPFL program. We utilize robustness checks as well as unique placebo tests to validate these results.(JEL H43, J13, J18, J48)     

The effect of MADD on drinking–driving activities: an empirical study

Since its establishment in 1980, MADD (Mothers Against Drunk Driving) has been instrumental in directing our nation's attention to the problems associated with drinking and driving activities. Through its legislative lobbying efforts, educational and victim support activities, MADD strives to increase the expected costs and reduce the expected benefits of driving under the influence of alcohol. The object of this paper is to develop and estimate a model which assesses the consequences of MADD's efforts on the incidence of drinking and driving. Using extensive data collected in California, a simultaneous equations model is estimated. The results suggest that MADD does have a deterrent effect upon the incidence of alcohol related accidents. Moreover, the effect is found to be stronger for alcohol related accidents with a non-fatal injury relative to those with a fatality.     

A healthier start: The effect of conditional cash transfers on neonatal and infant mortality in rural Mexico

Conditional cash transfer programs seek to break the intergenerational transmission of poverty by building the human capital of poor children. Despite their popularity throughout the developing world, relatively little is known about their effect on children's health outcomes. This paper evaluates the impact of the Mexican conditional cash transfer program, Progresa, on two important health outcomes: infant and neonatal mortality. It exploits the phasing-in of Progresa over time throughout rural Mexico to identify the impact of the program. The paper shows that Progresa led to a large 17% decline in rural infant mortality among the treated, but did not reduce neonatal mortality on average. The benefit-cost ratio is between 1.3 and 3.6. Tests for heterogeneity show larger declines for some groups including those municipalities whose pre-program levels of mortality were above the median, and those that prior to the program had higher illiteracy rates, and less access to electricity.     

GROUP DECISION MAKING WITH UNCERTAIN OUTCOMES: UNPACKING CHILD–PARENT CHOICE OF THE HIGH SCHOOL TRACK

Predicting group decisions under uncertainty requires disentangling individual members' utilities over the consequences of choice, their expectations for uncertain outcomes, and their choice process as a group. I estimate simple Bayesian models of child–parent choice of high school track with subjective risk and unilateral or bilateral, nonstrategic decisions, by combining families' actual choices with novel survey information about children's and parents' subjective probabilities over choice consequences, their individually preferred choices, and their decision roles. A set of policy counterfactuals confirms the importance of introducing the beliefs and decision roles of individual members in models and policy analysis of group decisions.