State Responses to Federal Matching Grants: The Case of Medicaid
Journal of Public Economics, Accepted. Pre-publication Version
Abstract: While Medicaid is currently financed by open-ended matching, in which the federal government's contribution is uncapped, there has been interest in transforming the financing structure to block grants, which limits federal cost-sharing to a fixed amount. To understand the implications of this reform, I measure the effect of match rates on Medicaid spending by using the variation induced by a kink in the match rate formula. I find that a percentage point increase in the federal match raises per-beneficiary spending by 3 to 6 percent and that these results are driven by high-spending states. Using this estimate, I discuss the welfare impact of a block grant reform.
Are Sufficient Statistics Necessary? Nonparametric Measurement of Deadweight Loss from Unemployment Insurance, with David Lee, Christopher O'Leary , Zhuan Pei, and Simon Quach
Journal of Labor Economics, 2021, 39(S2): S455-S506. Working Paper Version
Abstract: Central to the welfare analysis of income transfer programs is the deadweight loss associated with possible reforms. To aid analytical tractability, its measurement typically requires specifying a simplified model of behavior. We employ a complementary “decomposition” approach that compares the behavioral and mechanical components of a policy’s total impact on the government budget to study the deadweight loss of two unemployment insurance policies. Experimental and quasi-experimental estimates using state administrative data show that increasing the weekly benefit is more efficient (with a fiscal externality of 53 cents per dollar of mechanical transferred income) than reducing the program’s implicit earnings tax.
Unemployment Insurance and Means-Tested Program Interactions: Evidence from Administrative Data, with Christopher O'Leary
American Economic Journal: Economic Policy, 2020, 12(2): 159-192. Pre-publication Version
Abstract: We study the ways in which unemployment insurance (UI) benefits interact with other elements of the social safety net around job losses. We exploit a cutoff for UI eligibility, based on a workers' highest quarterly earnings in the past year, to generate quasi-experimental variation in UI receipt. We find that UI receipt cuts welfare (TANF) receipt by half among low-earning UI applicants, but has no impact on SNAP or Medicaid usage. However, because welfare participation is low in this population, overall crowdout is small. In the quarter following layoff, UI increases total income by 55 percent (including labor earnings and transfers).
Employment Effects of the Affordable Care Act Medicaid Expansions, with Alex Mas
Industrial Relations, 2018, 57(2): 206-234. Working Paper Version
Abstract: We examine whether the recent expansions in Medicaid from the Affordable Care Act reduced “employment lock” among childless adults who were previously ineligible for public coverage. We compare employment in states that chose to expand Medicaid versus those that chose not to expand, before and after implementation. We find that although the expansion increased Medicaid coverage by 3.0 percentage points among childless adults, there was no significant impact on employment.
The Effect of Unemployment Benefits on the Duration of Unemployment Insurance Receipt: New Evidence from a Regression Kink Design in Missouri, 2003-2013, with David Card, Andrew Johnston, Alex Mas, and Zhuan Pei
American Economic Review: Papers & Proceedings, 2015, 105(5): 126-130. Working Paper Version
Abstract: We provide new evidence on the effect of the unemployment insurance (UI) weekly benefit amount on unemployment insurance spells based on administrative data from the state of Missouri covering the period 2003-2013. Identification comes from a regression kink design that exploits the quasi-experimental variation around the kink in the UI benefit schedule. We find that UI durations are more responsive to benefit levels during the recession and its aftermath, with an elasticity between 0.65 and 0.9 as compared to about 0.35 pre-recession.
Supercompliers, with Matt Comey, Amanda Eng, and Zhuan Pei
Abstract: In a binary-treatment instrumental variable framework, we define supercompliers as the subpopulation whose treatment take-up positively responds to eligibility and whose outcome positively responds to take-up. Supercompliers are the only subpopulation to benefit from treatment eligibility and, hence, are important for policy. We provide tools to characterize supercompliers under a set of jointly testable assumptions. Specifically, we require standard assumptions from the local average treatment effect literature plus an outcome monotonicity assumption. Estimation and inference can be conducted with instrumental variable regression. In two job-training experiments, we demonstrate our machinery’s utility, particularly in incorporating social welfare weights into marginal-value-of-public-funds analysis.
Further Education During Unemployment, with Zhuan Pei
Abstract: Evidence on the effectiveness of retraining U.S. unemployed workers primarily comes from evaluations of training programs, which represent one narrow avenue for skill acquisition. We use high-quality records from Ohio and a matching method to estimate the effects of retraining, broadly defined as enrollment in postsecondary institutions. Our simple method bridges two strands of the dynamic treatment effect literature that estimate the treatment-now-versus-later and treatment-versus-no-treatment effects. We find that enrollees experience earnings gains of six percent three to four years after enrolling, after depressed earnings during the first two years. The earnings effects are driven by industry-switchers, particularly to healthcare.