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Economics

David Powell

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Full-Text Articles in Social and Behavioral Sciences

Do Medical Marijuana Laws Reduce Addictions And Deaths Related To Pain Killers?, David Powell, Rosalie Pacula, Mireille Jacobson Feb 2018

Do Medical Marijuana Laws Reduce Addictions And Deaths Related To Pain Killers?, David Powell, Rosalie Pacula, Mireille Jacobson

David Powell

Recent work finds that medical marijuana laws reduce the daily doses filled for opioid analgesics among Medicare Part-D and Medicaid enrollees, as well as population-wide opioid overdose deaths. We replicate the result for opioid overdose deaths and explore the potential mechanism. The key feature of a medical marijuana law that facilitates a reduction in overdose death rates is a relatively liberal allowance for dispensaries.  As states have become more stringent in their regulation of dispensaries, the protective value generally has fallen. These findings suggest that broader access to medical marijuana facilitates substitution of marijuana for powerful and addictive opioids. 

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Imperfect Synthetic Controls: Did The Massachusetts Health Care Reform Save Lives?, David Powell Dec 2017

Imperfect Synthetic Controls: Did The Massachusetts Health Care Reform Save Lives?, David Powell

David Powell

In 2006, Massachusetts enacted comprehensive health care reform which served as a model for the Affordable Care Act. I study the mortality effects of the reform using synthetic control estimation, relaxing two critical assumptions required to implement this method.  The traditional approach assumes the existence of a perfect synthetic control, which cannot exist if the outcomes of the treated unit are outside of the "convex hull" or functions of transitory shocks.  I propose simple modifications to relax these restrictions.  The new estimator outperforms the traditional method in simulations.   I estimate that the Massachusetts Health Care Reform reduced mortality by 3%.

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Panel Data Inference With Dependent Clusters, David Powell Dec 2016

Panel Data Inference With Dependent Clusters, David Powell

David Powell

This paper introduces a method which permits valid inference given a finite number of heterogeneous, correlated clusters. The method relies on a test statistic using the mean of the cluster-specific scores normalized by the variance and simulating the distribution of this statistic.  While many inference methods assume clusters are asymptotically independent or model dependence across clusters as a function of a distance metric, this paper estimates cross-cluster dependence by studying co-movements between clusters and then isolating the independent component of each cluster.  The method is simple to implement, can be employed for linear and nonlinear estimators, places no restrictions on …

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Supply-Side Drug Policy In The Presence Of Substitutes: Evidence From The Introduction Of Abuse-Deterrent Opioids, Abby Alpert, David Powell, Rosalie Liccardo Pacula Dec 2016

Supply-Side Drug Policy In The Presence Of Substitutes: Evidence From The Introduction Of Abuse-Deterrent Opioids, Abby Alpert, David Powell, Rosalie Liccardo Pacula

David Powell

Overdose deaths from prescription opioid pain relievers nearly quadrupled between 1999 and 2010.  We study the consequences of one of the largest supply disruptions to date to abusable opioids – the introduction of an abuse-deterrent version of OxyContin in 2010.  Supply-side interventions which limit access to opioids may have the unintended consequence of increasing use of substitute drugs, including heroin.  Exploiting cross-state variation in OxyContin exposure, we find that states with the highest initial rates of OxyContin misuse experienced the largest increases in heroin deaths.  Our results imply that the recent heroin epidemic is largely due to the reformulation of …

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Synthetic Control Estimation Beyond Case Studies: Does The Minimum Wage Reduce Employment?, David Powell Dec 2016

Synthetic Control Estimation Beyond Case Studies: Does The Minimum Wage Reduce Employment?, David Powell

David Powell

Panel data are often used in empirical work to account for fixed additive time and unit effects.  The synthetic control estimator relaxes the assumption of additive effects for case studies in which a treated unit adopts a single policy.  This paper generalizes the case study synthetic control estimator to estimate treatment effects for multiple discrete or continuous variables, jointly estimating the treatment effects and synthetic controls for each unit.  Applying the estimator to study the disemployment effects of the minimum wage for teenagers, I estimate an elasticity of -0.44, substantially larger in magnitude than estimates generated using additive fixed effects.

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Quantile Treatment Effects In The Presence Of Covariates, David Powell Dec 2016

Quantile Treatment Effects In The Presence Of Covariates, David Powell

David Powell

This paper proposes a method to estimate unconditional quantile treatment effects (QTEs) given one or more treatment variables, which may be discrete or continuous, even when it is necessary to condition on covariates.  The estimator, Generalized Quantile Regression (GQR), is developed in an instrumental variable framework for generality to permit estimation of unconditional QTEs for endogenous policy variables, but is also applicable in the conditionally exogenous case.  The framework includes simultaneous equations models with nonadditive disturbances which are functions of both unobserved and observed factors.  Quantile regression and instrumental variable quantile regression are special cases of GQR and available in …

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Quantile Regression With Nonadditive Fixed Effects, David Powell Jan 2016

Quantile Regression With Nonadditive Fixed Effects, David Powell

David Powell

This paper introduces a quantile regression estimator for panel data (QRPD) with nonadditive fixed effects, maintaining the nonseparable disturbance term commonly associated with quantile estimation. QRPD estimates the impact of exogenous or endogenous treatment variables on the outcome distribution using ``within" variation in the treatment variables or instruments for identification purposes. Most quantile panel data estimators include additive fixed effects which separates the disturbance term and assumes the parameters vary based only on the time-varying components of the disturbance term. QRPD is consistent for small T and straightforward to implement. The nonadditive fixed effects are never estimated or even specified. …

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Optimal Health Insurance And The Distortionary Effects Of The Tax Subsidy, David Powell Jan 2016

Optimal Health Insurance And The Distortionary Effects Of The Tax Subsidy, David Powell

David Powell

The tax exclusion of health insurance premiums represents the largest source of tax expenditures in the United States while reducing the after-tax price of insurance for the majority of households. This paper develops a model of optimal health insurance in the presence of a tax-deductible premium as well as considering the implications of the Affordable Care Act's ``Cadillac tax." While there is a long literature discussing the possible consequences of subsidizing health insurance through the tax code, we have little evidence about how the tax subsidy distorts the optimal cost-sharing schedule for a household. This paper provides theoretical and empirical …

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The Effect Of Population Aging On Economic Growth, The Labor Force And Productivity, David Powell Dec 2015

The Effect Of Population Aging On Economic Growth, The Labor Force And Productivity, David Powell

David Powell

Population aging is widely assumed to have detrimental effects on economic growth yet there is little empirical evidence about the magnitude of its effects.  This paper starts from the observation that many U.S. states have already experienced substantial growth in the size of their older population and much of this growth was predetermined by historical trends in fertility. We use predicted variation in the rate of population aging across U.S. states over the period 1980-2010 to estimate the economic impact of aging on state output per capita. We find that a 10% increase in the fraction of the population ages 60+ decreases …

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Disentangling Moral Hazard And Adverse Selection In Private Health Insurance, David Powell, Dana Goldman Dec 2015

Disentangling Moral Hazard And Adverse Selection In Private Health Insurance, David Powell, Dana Goldman

David Powell

Moral hazard and adverse selection create inefficiencies in private health insurance markets and understanding the relative importance of each factor is critical for policy.   We use claims data from a large firm which changed health insurance plan options to isolate moral hazard from plan selection.  Using an instrumental variables quantile regression approach, we estimate the differential causal impact of each health insurance plan on the entire distribution of medical expenditures.  We account for systematic sample attrition during the sample period by conditioning on a nonseparable sample selection adjustment.   Our estimates imply that 54% of the additional medical spending …

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Estimating Intensive And Extensive Tax Responsiveness: Do Older Workers Respond To Income Taxes?, Abby Alpert, David Powell Dec 2015

Estimating Intensive And Extensive Tax Responsiveness: Do Older Workers Respond To Income Taxes?, Abby Alpert, David Powell

David Powell

This paper studies the impact of income taxes on the labor supply decisions of older individuals.  We jointly estimate intensive and extensive margin tax elasticities while addressing selection issues that have previously hindered consistent estimation of labor supply effects.  We find large and statistically significant labor force participation tax elasticities for the population ages 62-74.   We also estimate statistically significant effects on the intensive margin.  Modeling two proposed age-targeted tax reforms, our estimates imply substantial scope for increasing labor force participation rates of older individuals through the tax code.

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Medical Care Spending And Labor Market Outcomes: Evidence From Workers' Compensation Reforms, David Powell, Seth Seabury Jan 2015

Medical Care Spending And Labor Market Outcomes: Evidence From Workers' Compensation Reforms, David Powell, Seth Seabury

David Powell

This paper studies the effectiveness of medical care spending on improving labor outcomes. Injuries sustained at work represent large income and welfare losses to households and there is a significant policy interest in reducing these burdens. Workers' compensation program is a large government program which provides monetary and medical benefits to injured workers. Despite the potential importance of medical care in improving the health and labor productivity of injured workers, little research has addressed the relationship between medical care provided through workers' compensation and post-injury labor outcomes. This paper exploits the 2003-2004 California workers' compensation reforms which reduced medical care …

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Does Labor Supply Respond To Transitory Income? Evidence From The Economic Stimulus Payments Of 2008, David Powell Jan 2015

Does Labor Supply Respond To Transitory Income? Evidence From The Economic Stimulus Payments Of 2008, David Powell

David Powell

Tax policy is often used to encourage consumer spending in recessions and a growing literature finds evidence that households increase short-term spending in response to receipt of tax rebates. The literature has largely ignored the effect on labor supply as rebates may crowd out labor earnings and households may consume additional leisure. The responsiveness of labor supply to transitory income has been underexplored more broadly so it is difficult to predict this labor supply effect. I exploit the randomized timing of the 2008 economic stimulus payments to study the effects of transitory income on monthly household labor earnings. Rebates can …

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Do Payroll Taxes In The United States Create Bunching At Kink Points?, David Powell Dec 2014

Do Payroll Taxes In The United States Create Bunching At Kink Points?, David Powell

David Powell

Much of the literature on labor supply responsiveness to taxes studies the effects of payroll and income taxes together, usually using income tax changes to identify effects. There is less research on how individuals respond to payroll taxes specifically. Given the salience of the payroll tax relative to other income taxes, it is possible that taxpayers respond differentially than income tax elasticities may suggest. Using data from the Social Security Administration, I exploit two recent short-term changes in payroll taxes to study whether labor earnings responded. The Making Work Pay Tax Credit reduced the payroll tax by 6.2 percentage points …

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The Exporter Productivity Premium Along The Productivity Distribution: Evidence From Quantile Regression With Nonadditive Firm Fixed Effects, David Powell, Joachim Wagner Jan 2014

The Exporter Productivity Premium Along The Productivity Distribution: Evidence From Quantile Regression With Nonadditive Firm Fixed Effects, David Powell, Joachim Wagner

David Powell

A vast literature on the international activities of heterogeneous firms finds the existence of a positive exporter productivity premium. On average, exporting firms are more productive than firms that sell on the national market only. The Melitz (2003) model, however, has implications for not only mean differences but also differences in the distribution of productivity. Furthermore, exporting firms may be different from non-exporting firms for reasons that are not included in the Melitz model. We believe that conditioning on firm fixed effects and studying the distribution of productivity are both necessary for empirical tests of the Melitz model. This paper …

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The Effect Of Local Labor Demand Conditions On The Labor Supply Outcomes Of Older Americans, Nicole Maestas, Kathleen J. Mullen, David Powell Dec 2012

The Effect Of Local Labor Demand Conditions On The Labor Supply Outcomes Of Older Americans, Nicole Maestas, Kathleen J. Mullen, David Powell

David Powell

A vast literature in labor economics has studied the relationship between local labor demand shifts and the outcomes of the working age population. This literature has ignored the impacts that these shocks have on older individuals, though there are reasons to believe that the effects are not uniform by age. Using data from the Census and the Health and Retirement Study, we measure the effects of local labor demand conditions on a host of outcomes for older individuals including employment, retirement, Social Security claiming, wages, and job characteristics. We find that local labor demand conditions do affect the labor and …

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Income Taxes, Compensating Differentials, And Occupational Choice: How Taxes Distort The Wage-Amenity Decision (With Hui Shan), David Powell Dec 2009

Income Taxes, Compensating Differentials, And Occupational Choice: How Taxes Distort The Wage-Amenity Decision (With Hui Shan), David Powell

David Powell

The link between taxes and occupational choices is central for understanding the welfare impacts of income taxes. Just as taxes distort the labor-leisure decision, they may also distort the wage-amenity decision. Yet, there have been few studies on the full response along this margin. When tax rates increase, workers favor jobs with lower wages and more amenities. We introduce a two-step methodology which sues compensating differentials to characterize the tax elasticity of occupational choice. We estimate a significant compensated elasticity of 0.03, implying that a 10% increase in the net-of-tax rate causes workers to change to a 0.3% higher wage …

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Heterogeneity In Income Tax Incidence: Are The Wages Of Dangerous Jobs More Responsive To Tax Changes Than The Wages Of Safe Jobs?, David Powell Dec 2009

Heterogeneity In Income Tax Incidence: Are The Wages Of Dangerous Jobs More Responsive To Tax Changes Than The Wages Of Safe Jobs?, David Powell

David Powell

Income taxes distort the relationship between wages and non-taxable amenities. When the marginal tax rate increases, amenities become more valuable as the compensating differential for low-amenity jobs is taxed away. While there is evidence that the provision of some amenities responds to taxes, the tax literature has ignored the consequences for job characteristics which cannot fully adjust. This paper compares the wage response of dangerous jobs – measured by injury and fatality rates – to the wage response of safe jobs. When marginal tax rates increase, we should see the pre-tax compensating differential for on-the-job risk increase, implying the existence …

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