The B.E. Journal of Economic Analysis & Policy

Published by De Gruyter

Volume 19 Issue 1 -

January 2019

Issue of The B.E. Journal of Economic Analysis & Policy

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Contents
Journal Overview

Research Articles

September 29, 2018

Public Health Insurance and Prescription Medications for Mental Illness

Johanna Catherine Maclean, Benjamin Cook, Nicholas Carson, Michael F Pesko

Article number: 20180067

Abstract

Mental illnesses are prevalent in the United States and globally. Cost is a critical barrier to treatment receipt. We study the effects of the Affordable Care Act's recent expansion of Medicaid, a public insurance system for the poor in the U.S., on psychotropic prescription medications for mental illness. We estimate differences-in-differences models using administrative data on medications for which Medicaid was a third-party payer over the period 2011–2017. Our findings suggest that these expansions increased psychotropic prescriptions by 21.0%. We show that Medicaid, and not patients, financed these prescriptions. For states expanding Medicaid, the total cost of these prescriptions was $28.0 M by the second quarter of 2017. Expansion effects were experienced across most major mental illness categories and across states with different levels of patient need, system capacity, and expansion scope. We find no statistically significant evidence that Medicaid expansion reduced mental illness.

October 6, 2018

Inter-Ethnic Friendship and Hostility between Roma and non-Roma Students in Hungary: The Role of Exposure and Academic Achievement

Tamás Hajdu, Gábor Kertesi, Gábor Kézdi

Article number: 20170289

Abstract

This study examines friendship and hostility relations between Roma students and the ethnically homogeneous non-Roma majority in Hungarian schools. Using data on friendship and hostility relations of 15-year-old students from 82 schools, the study focuses on the interaction between exposure to the other ethnic group and academic achievement of Roma students. High-achieving Roma students are shown to have significantly more friends and fewer adversaries than low-achieving ones, due to better inter-ethnic relations while having similar within-ethnic group relations. As a result, higher exposure to Roma students translates to more friendship and less hostility from non-Roma students in environments where more of the Roma students have higher achievement. Therefore, policies helping the achievement of Roma students can have immediate as well as long-term positive effects. Simulations suggest that a mixed policy of desegregation and closing the achievement gap may best foster positive inter-ethnic relations.

October 11, 2018

The Costs of Firm Exit and Labour Market Policies: New Evidence from Europe

Dan Andrews, Irene Ferrari, Alessandro Saia

Article number: 20170211

Abstract

The churning of firms is an inherent process of industrialized economies, which entails a high rate of job destruction. Thus, a key question is: what are the policies that minimize the costs of worker displacement due to business closure? Accordingly, this paper exploits a retrospective panel of workers in 13 European countries over the period 1985–2008 to explore the factors which shape the reemployment prospects of workers displaced due to business closure. The results suggest that higher spending on active labour market policies increases the reemployment prospects of the unemployed workers displaced by business closure, both in terms of unemployment duration and in terms of stability of reemployment. On the contrary, there is evidence of a negative and sizable impact of passive labour market policies on unemployment duration.

October 12, 2018

Parental Transfers, Intra-household Bargaining and Fertility Decision

Emin Gahramanov, Khusrav Gaibulloev, Javed Younas

Article number: 20180118

Abstract

This paper examines the role of parental transfers on family size. We introduce a simple theoretical model of fertility decision where preferences towards children may differ between female and male spouses. Parental transfers increase both the household income and the bargaining power of the recipient spouse. Therefore, transfers from wife’s and husband’s parents may have dissimilar effects on the number of children. Our empirical result, based on a unique household-level data for Japan, supports this hypothesis. In particular, received transfers from the wife’s parents are negatively associated with the demand for children. In contrast, both received and expected transfers from the husband’s parents are positively associated with the demand for children. These results hold important policy implications.

October 26, 2018

Do Firms Supported by Credit Guarantee Schemes Report Better Financial Results 2 Years After the End of Intervention?

Ondřej Dvouletý, Jan Čadil, Karel Mirošník

Article number: 20180057

Abstract

The study contributes to underdeveloped knowledge on effects of SME policies in Central and Eastern Europe. We evaluate two Czech credit guarantee schemes funded from EU funds during years 2007–2013. We conduct micro-econometric firm-level impact evaluation based on propensity score matching approach. We estimate average treatment effect on the treated (ATET) for six financial outcome variables (total assets, tangible fixed assets, personnel costs, sales, price-cost-margin and return on assets) measuring firm´s competitiveness. Two years after the programme, no statistically conclusive results were obtained for the most of the outcome variables. We found only a positive change in tangible fixed assets for the programme participants. However, we cannot say, that the supported firms would be better off, compared to those non-supported in a short-term. Our analysis shows that without reliable data gathered by public sector authorities, no rigorous evaluations can be made and thus no evidence driven policies can be formed.

December 12, 2018

Estimating the Impact of Ride-Hailing App Company Entry on Public Transportation Use in Major US Urban Areas

Erik Nelson, Nicole Sadowsky

Article number: 20180151

Abstract

Since 2011, the private ride-hailing (RH) app companies Uber and Lyft have expanded into more and more US urban areas. We use a dynamic entry event study to examine the impact of Uber and Lyft’s entry on public transportation (PT) use in the United States’ largest urban areas. In most cases, entry into urban areas was staggered: Uber entered first, followed several months later by Lyft. We generally find that PT use increased in the representative urban area, all else equal, immediately following first RH app company entry. However, this spike in PT use largely disappeared following the entry of the second RH app company. Slightly different RH app company–PT use relationships emerge when we estimate the PT use model over various subsets of urban areas and PT modes.

December 15, 2018

Announced or Surprise Inspections and Oligopoly Competition

Emmanuel Dechenaux, Andrew Samuel

Article number: 20180141

Abstract

To enforce compliance, regulators often choose between announced or unannounced (surprise) inspections. We analyze the impact of these inspection regimes on firms’ compliance choices in a multiple stage oligopoly game of quantity competition with endogenous compliance, monitoring and avoidance. In equilibrium, whether unannounced inspections achieve a higher level of compliance than announced inspections depends on the number of firms, demand and the cost of compliance. Furthermore, the impact on compliance of increasing the fine, the supervisor’s wage or the probability of inspections also depends on market size and structure and may be non-monotonic. Finally we provide conditions under which a welfare maximizing regulator will prefer an unannounced to an announced regime. Thus, our results suggest that when choosing the appropriate inspection regime, regulators should account for market characteristics, especially if compliance maximization is the objective.

December 15, 2018

Terrorism and Firm Performance: Empirical Evidence from Pakistan

Ummad Mazhar

Article number: 20180041

Abstract

A secure business environment for private enterprises is desired by all states and is endorsed as a part of United Nation’s sustainable development goals. However, the risk exposure of private enterprises against terrorism, particularly in developing countries, is not adequately studied. Using Enterprise Surveys (ES) data for more than 2000 firms located across the four provinces of Pakistan, this paper studies the link between the risk of terrorism and firm performance. It finds, after controlling for various firm specific performance determinants as well as provincial and sector specific heterogeneities, that terrorism has a significant negative effect on firms’ performance which is independent of firm size. This effect is robust against different specifications and estimation methods including instrumental variables strategy. Beyond much explored aggregate consequences, terrorism has direct consequences for production processes at micro level.

January 5, 2019

The Curious Case of Farmer Credit Cards: Evidence from an Indian Policy Reform

Somdeep Chatterjee

Article number: 20180048

Abstract

In this paper, I study India’s Kisan (farmer) Credit Card (KCC) program and end up with an apparently counter-intuitive finding. Exploiting plausibly exogenous variation in the reach of the program and using a district panel dataset, I find evidence of increases in agricultural output of rice, which is the major crop of the country. I also find that on average the use of high-yielding variety seeds increases at the district level, providing suggestive evidence of technology adoption. However, there is no evidence of higher borrowing among households in response to this policy. Although there is evidence of increased borrowing among the unconstrained borrowers, this suggests that KCCs did not provide new access to credit. Yet, large increases in production can be observed. Although apparently puzzling, the findings may be explained in terms of the changing risk tolerance of farmers who may perceive KCCs as supplementary self-insurance products.

January 5, 2019

Population Policy, Demographic Change, and Firm Returns: Evidence from China

Zhiyong An, Yilin Hou

Article number: 20180128

Abstract

We take advantage of China’s relaxation in January 2014 of its “one-child” family planning policy to study the causal relationship between expected future demographic changes and firms’ stock returns. We use an event study method as our identification strategy and employ data from Chinese stock markets to implement the analysis. We find consistent evidence suggesting that expected demographic changes exert statistically and economically significant effects on firms’ stock returns. We address four potential threats about the validity of our empirical design and argue that our conclusion is not China-specific, but a generic lesson portable to developed countries.

January 5, 2019

Sorting into Contests: Evidence from Production Contracts

Zhen Wang, Tomislav Vukina

Article number: 20180049

Abstract

In this paper, we investigate sorting patterns among chicken producers who are offered a menu of contracts to choose from. We show that the sorting equilibrium reveals a positive sorting where higher ability producers self-select themselves into contracts to grow larger chickens and lower ability types self-select themselves into contracts to grow smaller birds. We also show that eliciting this type of sorting behavior is profit maximizing for the principal. In the empirical part of the paper, we first estimate growers’ abilities using a two-way fixed effects model and subsequently use these estimated abilities to estimate a random utility model of contract choice. Our empirical results are supportive of the developed theory.

September 25, 2018

She-E-Os and the Cost of Debt: Do Female CEOs Pay Less for Credit?

Muhammad Usman, Muhammad Umar Farooq, Junrui Zhang, Muhammad Abdul Majid Makki, Junqin Sun

Article number: 20180177

Abstract

Does the CEO’s gender matter to lenders? Using data from 2006 to 2015 for listed companies in China, we find reliable evidence that lenders charge firms led by female CEOs (She-E-Os) less for debt than they do from firms led by male. In addition, we find that the leadership structure of state-owned enterprises (SOEs) also matters to lenders because SOEs with female CEOs have lower cost of debt than do those with male CEOs. Our findings remain consistent after controlling for endogeneity issue.

About this journal

Objective
The B.E. Journal of Economic Analysis & Policy (BEJEAP) welcomes submissions that employ microeconomics to analyze issues in organizational economics, consumer behavior, and public policy. Articles submitted to BEJEAP can come in two formats: research papers and letters. Authors should bring to their analysis whatever microeconomic theoretical, experimental or econometric tools are helpful. We publish both empirical work and applied theory (though not more abstract forms of applied theory), and our aim is to disseminate papers that have practical implications for public policy, organizational or individual decision making.

Topics

Design of organizations and institutions
Industrial organization
Health economics
Public finance
Labour Economics
Economics of education, family, development, law, or the environment
Effects of domestic and international policy

Article formats
Research Papers, Letters

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