Research
Federico Zilio, Ross Hickey, Ted McDonald, Eric Sun, Yuting Zhang Health Shocks and Household Allocation of Time and Spending
Using Household Income and Labour Dynamics in Australia data we study how the household allocation of time and spending changes in response to individual health shocks. Applying an event study design, we document that health shocks induce a reduction in time in the labour market for the affected person, and an increase in time allocated to home production activities for the unaffected spouse whose partner experienced the shock. We show that consumption of the health commodity rises in the form of an increase in spending of health-related goods and time spent in caring by the unaffected spouse.
Earnings risks and income insurance: evidence from Australian tax data
Using Australian Longitudinal Tax data, we study earnings and income risks experienced by Australian workers. We characterize the distribution of earnings and income growth and show deviations of the distributions from normality and linearity. We find that the distributions of earnings and income growth display negative skewness and high kurtosis. Skewness becomes more negative for older workers and those at the top of the earnings distribution. Kurtosis is the highest for older workers and those in the middle of the earnings distribution. We also explore the role of welfare, investment and spouse earnings as insurance mechanisms from earnings risk and find that welfare is the most relevant channel to insure income. Finally, we estimate the impulse response function and show that negative earnings changes are more persistent for workers at the top of the earnings distribution than those at the bottom.
M. Brewer, T. Crossley & F. Zilio, What Do We Really Know about the Employment Effects of the UK’s National Minimum Wage?
A substantial body of research on the UK National Minimum Wage has concluded that the introduction and subsequent up-ratings of the NMW have not had a detrimental effect on employment. This research has directly influenced, through the Low Pay Commission, the conduct of policy. We revisit this literature and o er a reassessment, motivated by two concerns. First, this literature employs difference-in-difference designs, even though there are significant challenges in conducting appropriate inference in such designs, and they can have very low power when inference is conducted appropriately. Second, the literature has focused on the binary outcome of statistical rejection of the null hypothesis, without attention to the range of employment effects that are consistent with the data. In our reanalysis of the data, we conduct inference using recent suggestions for best practice and consider what magnitude of employment effects the data can and cannot rule out. We find that the data are consistent with both large negative and positive impacts of the UK National Minimum Wage on employment. We conclude that the existing data, combined with difference-in-difference designs, in fact offers very little guidance to policy makers.
T. Crossley & F. Zilio, The Health Benefits of a Targeted Cash Transfer: The UK Winter Fuel Payment Health Economics (2018)
Each year the UK records 25,000 or more excess winter deaths, primarily among the elderly. A key policy response is the “Winter Fuel Payment” (WFP), a labelled but unconditional cash transfer to older households. The WFP has been shown to raise fuel spending among eligible households. We examine the causal effect of the WFP on health outcomes, including self-reports of chest infection, measured hypertension and bio-markers of infection and inflammation. We find a robust and statistically significant five percentage point reduction in the incidence of high levels of serum fibrinogen, but no significant effect for other markers of illness.
Does a housing subsidy cut really lower rents? Evidence from a reform in the UK
A subsidy can potentially affect the market price for both subsidised and unsubsidised buyers. This paper investigates how a cut to housing subsidies changed rents paid by subsidised and unsubsidised tenants. I exploit an exogenous cut in housing subsidies in the UK as a quasi-experimental design to estimate whether the incidence of the reform in the housing subsidy fell on landlords or subsidised tenants. I find that rents did not decrease significantly and most of the burden of the subsidy cut was borne by subsidised tenants. In addition, the subsidy cut did not produce on average any spillover effect on rents paid by unsubsidised tenants. These findings give evidence that the rental market was not originally segmented between subsidised and unsubsidised tenants. The decrease in the demand of subsidised tenants was offset by the recent expansion of the private rental market due to an increase in number of unsubsidised tenants and new subsidy recipients.