The primary goals of food assistance programs are to alleviate child hunger and reduce food insecurity; if successful, such programs may have the added benefit of improving child academic outcomes (e.g., test scores, attendance, behavioral outcomes). Some U.S. government programs serve children in the home, such as the Supplemental Nutritional Assistance Program (SNAP), others serve them at school, such as the National School Lunch Program (NSLP) and School Breakfast Program (SBP), and still others fall in-between, such as the Summer Food Service Program (SFSP) and the Child and Adult Care Food Program (CACFP). Most empirical research seeking to identify the causal effect of such programs on child academic outcomes addresses the endogeneity of program participation with a reduced form, intent-to-treat approach. Specifically, such studies estimate the effect of a program’s availability, timing, or other specific feature on the academic outcomes of all potentially affected children. While findings of individual studies and interventions are mixed, some general conclusions emerge. First, increasing the availability of these programs typically has beneficial effects on relatively contemporaneous academic and behavioral outcomes. The magnitudes are modest but still likely pass cost-benefit criteria, even ignoring the fact that the primary objective of such programs is alleviating hunger, not improving academic outcomes. Less is known about the dynamics of the effects, for example, whether such effects are temporary boosts that dissipate or instead accumulate and grow over time. Likewise, the effects of recent innovations to these programs, such as breakfast in the classroom or increases in SNAP benefits to compensate for reduced time in school during the pandemic, yield less clear conclusions (the former) and/or have not been studied (the latter). Finally, many smaller programs that likely target the neediest children remain under- or un-examined. Unstudied government-provided programs include SFSP and CACFP. There are also a growing number of understudied programs provided primarily by charitable organizations. Emerging evidence suggests that one such program, Weekend Feeding or “Backpack” programs, confers substantial benefits. There, too, more work needs to be done, both to confirm these early findings and to explore recent innovations such as providing food pantries or “Kids’ Cafés” on school grounds. Especially in light of the uncertain fate of many pandemic-related program expansions and innovations, current empirical evidence establishes that the additional, beneficial spillover effects to academic outcomes—beyond the primary objective of alleviating food insecurity—deserve to be considered as well.
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Article
The Academic Effects of United States Child Food Assistance Programs—At Home, School, and In-Between
Michael D. Kurtz, Karen Smith Conway, and Robert D. Mohr
Article
Charter Schools’ Effectiveness, Mechanisms, and Competitive Influence
Sarah R. Cohodes and Katharine S. Parham
Across the United States, charter schools—publicly funded and regulated, but privately run schools—appear to perform, on average, at about the same level as their district counterparts. The broadest studies of charter school effectiveness use observational methods, which may not fully account for selection of students into charter schools. However, this finding is confirmed by lottery-based evidence from a few broad samples that again presents a varied picture of charter impact and little average difference across sectors. Underlying the similarity in performance across sectors is one of the most consistent findings from both observational and lottery-based evidence of charter schools’ impact on student achievement: Charters located in urban areas boost student test scores, particularly for Black, Latinx, and students from lower-income households. The test score gains appear to be largest in urban charters that employ “No Excuses” practices. Attending some urban charter schools also increases college enrollment and voting and reduces risky behavior. However, evidence on such long-term outcomes is limited to a few samples, and evidence on college graduation and adult earnings is even rarer, making it difficult to draw conclusions beyond test scores about the overall effectiveness of the charter sector.
Research on the mechanisms underlying charter successes, when they occur, is growing. No Excuses charter schools—which employ high expectations, strict disciplinary codes, and intense academic focus—generate consistent test score gains, but their controversial disciplinary practices are not necessarily a condition for academic success. Charter school teachers tend to be less qualified and more likely to leave the profession than traditional public school teachers, though the impact of these challenges for the labor market is understudied. Similarly, the influence of charter authorizers and related accountability structures is limited and would benefit from examination using more rigorous methodologies. The competitive impact of charter schools on traditional public schools typically suggests a small, beneficial influence on neighboring schools’ student achievement, though there is variation across contexts. Additionally, while some local analyses suggest charters reduce funding in nearby districts, at least in the short term, a larger scale study finds charter entry generates more revenue per pupil for district schools. There is competing evidence on charters’ contribution to school racial segregation, and little evidence on the impact of newer, intentionally diverse school models. In all, more research, in more contexts, is needed to further understand where, for whom, and why charters are most effective.
Article
Childcare and Children’s Development: Features of Effective Programs
Jo Blanden and Birgitta Rabe
Governments around the world are increasingly investing resources for young children, and universal provision of early childhood education and care (ECEC) has become widespread. Children’s development is affected by the investments they receive both within and outside the household. A simple theoretical framework predicts that the provision of public childcare will improve children’s development if it offers more stimulation than the care it replaces. Generally, carefully designed studies show that the provision of early childcare is beneficial, especially for children from disadvantaged backgrounds. This is in line with expectations that the alternative care experienced by children from less affluent, less educated, and immigrant backgrounds is likely to be of lower quality. Interestingly, however, studies show that the children who would benefit the most are least likely to receive care, providing a challenge for policy makers. Some programs, such as the $5-per-day childcare in Quebec, have negative effects and therefore may be of poor quality. However, comparing results across programs that vary in several dimensions makes it difficult to separate out the ingredients that are most important for success. Studies that focus on identifying the factors in ECEC that lead to the greatest benefit indicate that some standard measures such as staff qualifications are weakly linked to children’s outcomes, whereas larger staff–child ratios and researcher-measured process quality are beneficial. Spending more time in high-quality childcare from around age 3 has proved to be beneficial, whereas the effect of an increase in childcare for younger children is particularly sensitive to each program’s features and context.
Article
Choice Inconsistencies in the Demand for Private Health Insurance
Olena Stavrunova
In many countries of the world, consumers choose their health insurance coverage from a large menu of often complex options supplied by private insurance companies. Economic benefits of the wide choice of health insurance options depend on the extent to which the consumers are active, well informed, and sophisticated decision makers capable of choosing plans that are well-suited to their individual circumstances.
There are many possible ways how consumers’ actual decision making in the health insurance domain can depart from the standard model of health insurance demand of a rational risk-averse consumer. For example, consumers can have inaccurate subjective beliefs about characteristics of alternative plans in their choice set or about the distribution of health expenditure risk because of cognitive or informational constraints; or they can prefer to rely on heuristics when the plan choice problem features a large number of options with complex cost-sharing design.
The second decade of the 21st century has seen a burgeoning number of studies assessing the quality of consumer choices of health insurance, both in the lab and in the field, and financial and welfare consequences of poor choices in this context. These studies demonstrate that consumers often find it difficult to make efficient choices of private health insurance due to reasons such as inertia, misinformation, and the lack of basic insurance literacy. These findings challenge the conventional rationality assumptions of the standard economic model of insurance choice and call for policies that can enhance the quality of consumer choices in the health insurance domain.
Article
Competition and Quality in Healthcare
Peter Sivey and Yijuan Chen
Quality competition between alternative providers is an increasingly important topic in the health economics literature. This literature includes theoretical and empirical studies that have been developed in parallel to 21st-century policies to increase competition between doctors or hospitals. Theoretical studies have clarified how competitive markets can give healthcare providers the incentive to improve quality. Broadly speaking, if providers have an incentive to attract more patients and patients value quality, providers will raise quality until the costs of raising quality are equal to the additional revenue from patients attracted by the rise in quality. The theoretical literature has also investigated how institutional and policy parameters determine quality levels in equilibrium. Important parameters in models of quality competition include the degree of horizontal differentiation, the level of information about provider quality, the costs of switching between providers, and the time-horizon of quality investment decisions.
Empirical studies have focused on the prerequisites of quality competition (e.g., do patients choose higher quality providers?) and the impact of pro-competition policies on quality levels. The most influential studies have used modern econometric approaches, including difference-in differences and instrumental variables, to identify plausibly causal effects. The evidence suggests that in most contexts, quality is a determinant of patient choice of provider, especially after greater patient choice is made available or information is published about provider quality.
The evidence that increases in competition improve quality in healthcare is less clear cut. Perhaps reflecting the economic theory of quality competition, showing that different parameter combinations or assumptions can produce different outcomes, empirical results are also mixed. While a series of high-quality studies in the United Kingdom appear to show strong improvements in quality in more competitive areas following pro-competition reforms introducing more choice and competition, other studies showed that these quality improvements do not extend to all types of healthcare or alternative measures of quality.
The most promising areas for future research include investigating the “black box” of quality improvement under competition, and behavioral studies investigating financial and nonfinancial motivations for quality improvements in competitive markets.
Article
The Contribution of Vocational Education and Training to Innovation and Growth
Uschi Backes-Gellner and Patrick Lehnert
Despite the common view that innovation requires academically educated workers, some countries that strongly emphasize vocational education and training (VET) in their education systems—such as Switzerland and Germany—are highly competitive internationally in terms of innovation. These countries have dual VET programs, that is, upper-secondary-level apprenticeship programs, that combine about three quarters of workplace training with about one quarter of vocational schooling, and design them in such a way that their graduates (i.e., dual apprenticeship-graduates) play crucial roles in innovation processes. Regular updates of VET curricula incorporate the latest technological developments into these curricula, thereby ensuring that dual apprenticeship-graduates possess up-to-date, high-level skills in their chosen occupation. This process allows these graduates to contribute to innovation in firms. Moreover, these graduates acquire broad sets of technical and soft skills that enhance their job mobility and flexibility. Therefore, conventional wisdom notwithstanding, dual apprenticeship-graduates in such countries not only have broad skill sets that accelerate innovation in firms, but also willingly participate in innovation because of their high flexibility and employability.
Moreover, Switzerland and Germany have tertiary-level VET institutions that foster innovation. These are universities of applied sciences (UASs), which teach and conduct applied research, thereby helping build a bridge between different types of knowledge (vocational and academic). UAS students have prior vocational knowledge through their dual apprenticeship and acquire applied research skills from UAS professors who usually have both work experience and a doctoral degree from an academic university. Thus UAS graduates combine sound occupational knowledge with applied research knowledge inspired by input from the academic research frontier and from practical research and development (R & D) in firms. Firms employ UAS graduates with their knowledge combination as an important input for R & D. Consequently, regions with a UAS have higher levels of innovation than regions without one. This effect is particularly strong for regions outside major innovation centers and for regions with larger percentages of smaller firms.
Article
COVID-19 and Mental Health: Natural Experiments of the Costs of Lockdowns
Climent Quintana-Domeque and Jingya Zeng
The global impact of the COVID-19 pandemic has been profound, leaving a significant imprint on physical health, the economy, and mental well-being. Researchers have undertaken empirical investigations across different countries, with a primary focus on understanding the association between lockdown measures—an essential public health intervention—and mental health. These studies aim to discern the causal effect of lockdowns on mental well-being. Three notable studies have adopted natural experiments to explore the causal effect of lockdowns on mental health in diverse countries. Despite variations in their research methodologies, these studies collectively support the conclusion that lockdowns have had detrimental consequences on mental health. Furthermore, they reveal that the intensity of these negative effects varies among distinct population groups. Certain segments of the population, such as women, have borne a more profound burden of the mental health costs associated with lockdown measures. In light of these findings, it becomes imperative to consider the implications for mental health when implementing public health interventions, especially during crises like the COVID-19 pandemic. While rigorous measures like lockdowns are essential for safeguarding public health, striking a balance with robust mental health support policies becomes crucial to mitigating the adverse impacts on mental well-being.
Article
Developmental Origins of Health Inequality
Gabriella Conti, Giacomo Mason, and Stavros Poupakis
Building on early animal studies, 20th-century researchers increasingly explored the fact that early events—ranging from conception to childhood—affect a child’s health trajectory in the long-term. By the 21st century, a wide body of research had emerged, incorporating the original fetal origins hypothesis into the developmental origins of health and disease. Evidence from Organization for Economic Cooperation and Development (OECD) countries suggests that health inequalities are strongly correlated with many dimensions of socioeconomic status, such as educational attainment, and that they tend to increase with age and carry stark intergenerational implications. Different economic theories have been developed to rationalize this evidence, with an overarching comprehensive framework still lacking. Existing models widely rely on human capital theory, which has given rise to separate dynamic models of adult and child health capital within a production function framework. A large body of empirical evidence has also found support for the developmental origins of inequalities in health. On the one hand, studies exploiting quasi-random exposure to adverse events have shown long-term physical and mental health impacts of exposure to early shocks, including pandemics or maternal illness, famine, malnutrition, stress, vitamin deficiencies, maltreatment, pollution, and economic recessions. On the other hand, studies from the 20th century have shown that early interventions of various content and delivery formats improve life course health. Further, given that the most socioeconomically disadvantaged groups show the greatest gains, such measures can potentially reduce health inequalities. However, studies of long-term impacts as well as the mechanisms via which shocks or policies affect health, and the dynamic interaction among them, are still lacking. Mapping the complexities of those early event dynamics is an important avenue for future research.
Article
The Early Origins of the Civil Rights Movement in the United States: An Analysis of the Growth of the NAACP
Daniel Aaronson, Jala Abner, Mark Borgschulte, and Bhashkar Mazumder
A newly digitized panel of county-level branch activity of the National Association for the Advancement of Colored People (NAACP) is used to describe the potential factors underlying the expansion of political participation in the American South, with a particular emphasis on the short period from the late 1930s through the 1940s. This period has long been recognized for its significant progress in reducing sizable racial gaps in labor market outcomes. But little work in economics has considered the role of political participation in shaping that progress. As the preeminent civil rights organization prior to the 1950s, the NAACP provides a natural lens in which to explore the expansion in political activism during this crucial period. Associative evidence suggests that a few potential channels could be especially worthy of future study, including the role of demographics, increased human capital, expansion in labor demand driven by wartime efforts, reduction in racial violence, latent political activism, and expansions in political and social networks, all of which have been highlighted in a variety of history and social science literatures. However, careful causal empirical work does not currently exist on these factors. Filling in this hole is important for providing compelling evidence on the origins of the 20th century’s most important U.S. political movement, as well as adding to a growing literature in political economy and development economics which examines the role that grassroots activism has played on economic growth and income inequality around the world.
Article
The Economic Benefits of Education for the Reduction of Crime
Joel Carr, Olivier Marie, and Sunčica Vujić
Historically, social observers have repeatedly noted a correlation between education and crime, observing that individuals with lower levels of education are more likely to commit crime. However, the relationship between education and crime is complex, and it is important to clearly establish causality to determine if investing in education can effectively reduce crime. Merely observing persistent educational-attainment inequalities between offenders and non-offenders is not sufficient to make any causal claims about the underlying relationship between education and crime. Many other factors can influence an individual’s decision to stay in school or commit a crime, and these factors need to be accounted for when estimating the relationship between education and crime. Economists theoretically predicted in the late 1960s that education, via its positive effect on future earnings, would reduce the probability of criminal participation. Empirical studies have since used various econometric methods to establish that, on average, education has a strong causal crime-reducing effect. One strand of this literature has established in various contexts that individuals from cohorts forced by law to stay longer in school were much less likely to end up in court or prison. There is, however, still much to be discovered about the effect of education on crime, such as the underlying mechanisms related to income or non-cognitive effects, and heterogeneities by context, education level and quality, and individual characteristics. Overall, economists widely agree that investing in education is an efficient public-spending strategy to effectively reduce crime.
Article
The Economic Effect of Vocational Education on Student Outcomes
Shaun M. Dougherty and Walter G. Ecton
As long as formal education has existed, there has been a clear connection between education and preparation for employment. In much of the world, formal educational systems have come to include vocational education and training (VET) as part of secondary education. In these spaces, individuals can receive continued training in general skills related to reading, writing, and mathematics while also pursuing specific skills in prescribed vocational or technical programs (e.g., skilled trades, culinary arts, information technology, health services). Across all countries and associated educational systems, a tension exists between whether to invest educational dollars in general versus specific skill development. On the one hand, general skills allow for transferability and likely support adaptability across workplace settings and in response to changes in employment conditions. On the other hand, secondary school completion is not universal, even in rich countries, and there are often large penalties or social costs to not completing secondary education. Furthermore, across countries of varying GDP levels, the question about how to best prepare individuals for entry into and success in the workforce is a persistent one. Evidence suggests that the payoff to investments in VET vary considerably, and that context and the characteristics of participants likely inform the expected returns to such investments. For instance, there is strong evidence across contexts that male participants in VET are likely to benefit in the short- to medium-term with respect to employment and earnings, and possibly also engage in less crime. Unresolved, however, is whether these payoffs persist in the longer term. In contrast, for women the estimated returns appear to be more context dependent. Some research shows reduced fertility and greater financial independence of women participating in VET programs in less-developed countries, but evidence is mixed in other settings. All evidence underscores that the payoff to VET is likely tied to the extent to which it adapts to contemporary economic needs, including extending the amount of total formal education that participants might otherwise receive.
Article
The Economics of Abortion Policy
Damian Clarke
The economic literature on abortion policy broadly is broad, studying abortion reforms that have occurred over the past two centuries, with a concentration of studies examining policy reform over the 20th and 21st centuries. The literature has examined a range of policies: both those which restrict access and those which legalize elective abortion; but within these two broad classes, the precise nature of policy reform can vary greatly. Policy reforms studied range from specific types of limits or financial barriers restricting access for particular age groups to policies which entirely criminalize or legalize elective abortion. Policies have been studied that restrict or relax individual access as well as impose regulations on abortion providers. The economic literature on abortion reform has illuminated a number of clear links, showing that increased availability of abortion decreases rates of unintended births, and vice versa when access to abortion is limited. These effects have been shown to have downstream impacts in many domains such as family formation, educational attainment, and labor market attachment, as well as impacts on health, empowerment, and broader measures of well-being such as life satisfaction and exposure to intimate partner violence.
There is mixed evidence when examining the impact that abortion reform has on cohorts of children exposed to reform variation. Across contexts abortion reforms have been shown to affect the composition of cohorts of children via differential rates of access to abortion, though this compositional effect is context-dependent, and as such a number of different patterns have been documented. Compositional effects of policies often also have been shown to have a geographic component, given that certain types of individuals are more easily able to travel to access abortion where restrictions are in place in one area but not in another.
Much of what is known in the economic literature on abortion is gleaned from country-level case studies and cohort variation in access, with this evidence generated from a relatively small number of countries in which reforms have occurred and data is available. In general, much of the literature available covers low fertility and industrialized settings. Additional evidence from other settings would allow for a broader understanding of how abortion reform affects well-being.
Article
The Economics of Diet and Obesity: Public Policy
Fabrice Etilé
The rise in obesity and other food-related chronic diseases has prompted public-health officials of local communities, national governments, and international institutions to pay attention to the regulation of food supply and consumer behavior. A wide range of policy interventions has been proposed and tested since the early 21st century in various countries. The most prominent are food taxation, health education, nutritional labeling, behavioral interventions at point-of-decision, advertising, and regulations of food quality and trade. While the standard neoclassical approach to consumer rationality provides limited arguments in favor of public regulations, the recent development of behavioral economics research extends the scope of regulation to many marketing practices of the food industry. In addition, behavioral economics provides arguments in favor of taxation, easy-to-use front-of-pack labels, and the use of nudges for altering consumer choices. A selective but careful review of the empirical literature on taxation, labeling, and nudges suggests that a policy mixing these tools may produce some health benefits. More specifically, soft-drink taxation, front-of-pack labeling policies, regulations of marketing practices, and eating nudges based on affect or behavior manipulations are often effective methods for reducing unhealthy eating.
The economic research faces important challenges. First, the lack of a proper control group and exogenous sources of variations in policy variables make evaluation very difficult. Identification is challenging as well, with data covering short time periods over which markets are observed around slowly moving equilibria. In addition, truly exogenous supply or demand shocks are rare events. Second, structural models of consumer choices cannot provide accurate assessment of the welfare benefits of public policies because they consider perfectly rational agents and often ignore the dynamic aspects of food decisions, especially consumer concerns over health. Being able to obtain better welfare evaluation of policies is a priority. Third, there is a lack of research on the food industry response to public policies. Some studies implement empirical industrial organization models to infer the industry strategic reactions from market data. A fruitful avenue is to extend this approach to analyze other key dimensions of industrial strategies, especially decisions regarding the nutritional quality of food. Finally, the implementation of nutritional policies yields systemic consequences that may be underestimated. They give rise to conflicts between public health and trade objectives and alter the business models of the food sector. This may greatly limit the external validity of ex-ante empirical approaches. Future works may benefit from household-, firm-, and product-level data collected in rapidly developing economies where food markets are characterized by rapid transitions, the supply is often more volatile, and exogenous shocks occur more frequently.
Article
The Economics of Diet and Obesity: Understanding the Global Trends
Fabrice Etilé and Lisa Oberlander
In the last several decades obesity rates have risen significantly. In 2014, 10.8% and 14.9% of the world’s men and women, respectively, were obese as compared with 3.2% and 6.4% in 1975. The obesity “epidemic” has spread from high-income countries to emerging and developing ones in every region of the world. The rising obesity rates are essentially explained by a rise in total calorie intake associated with long-term global changes in the food supply. Food has become more abundant, available, and cheaper, but food affluence is associated with profound changes in the nutritional quality of supply. While calories have become richer in fats, sugar, and sodium, they are now lower in fiber. The nutrition transition from starvation to abundance and high-fat/sugar/salt food is thus accompanied by an epidemiological transition from infectious diseases and premature death to chronic diseases and longer lives. Food-related chronic diseases have important economic consequences in terms of human capital and medical care costs borne by public and private insurances and health systems.
Technological innovations, trade globalization, and retailing expansion are associated with these substantial changes in the quantity and quality of food supply and diet in developed as well as in emerging and rapidly growing economies. Food variety has significantly increased due to innovations in the food production process. Raw food is broken down to obtain elementary substances that are subsequently assembled for producing final food products. This new approach, as well as improvements in cold chain and packaging, has contributed to a globalization of food chains and spurred an increase of trade in food products, which, jointly with foreign direct investments, alters the domestic food supply. Finally, technological advancements have also favored the emergence of large supermarkets and retailers, which have transformed the industrial organization of consumer markets.
How do these developments affect population diets and diet-related diseases? Identifying the contribution of supply factors to long-term changes in diet and obesity is important because it can help to design innovative, effective, and evidence-based policies, such as regulations on trade, retailing, and quality or incentives for product reformulation. Yet this requires a correct evaluation of the importance and causal effects of supply-side factors on the obesity pandemic. Among others, the economic literature analyzes the effect of changes in food prices, food availability, trade, and marketing on the nutrition and epidemiological transitions. There is a lack of causal robust evidence on their long-term effects. The empirical identification of causal effects is de facto challenging because the dynamics of food supply is partly driven by demand-side factors and dynamics, like a growing female labor force, habit formation, and the social dynamics of preferences.
There are several important limitations to the literature from the early 21st century. Existing studies cover mostly well-developed countries, use static economic and econometric specifications, and employ data that cover short periods of time unmarked by profound shifts in food supply. In contrast, empirical research on the long-term dynamics of consumer behavior is much more limited, and comparative studies across diverse cultural and institutional backgrounds are almost nonexistent. Studies on consumers in emerging countries could exploit the rapid time changes and large spatial heterogeneity, both to identify the causal impacts of shocks on supply factors and to document how local culture and institutions shape diet and nutritional outcomes.
Article
The Economics of Early Interventions Aimed at Child Development
Samuel Berlinski and Marcos Vera-Hernández
A set of policies is at the center of the agenda on early childhood development: parenting programs, childcare regulation and subsidies, cash and in-kind transfers, and parental leave policies. Incentives are embedded in these policies, and households react to them differently. They also have varying effects on child development, both in developed and developing countries. We have learned much about the impact of these policies in the past 20 years. We know that parenting programs can enhance child development, that centre based care might increase female labor force participation and child development, that parental leave policies beyond three months don’t cause improvement in children outcomes, and that the effects of transfers depend much on their design. In this review, we focus on the incentives embedded in these policies, and how they interact with the context and decision makers to understand the heterogeneity of effects and the mechanisms through which these policies work. We conclude by identifying areas of future research.
Article
The Economics of End-of-Life Spending
Hans Olav Melberg
End-of-life spending is commonly defined as all health costs in the 12 months before death. Typically, the costs represent about 10% of all health expenses in many countries, and there is a large debate about the effectiveness of the spending and whether it should be increased or decreased. Assuming that health spending is effective in improving health, and using a wide definition of benefits from end-of-life spending, several economists have argued for increased spending in the last years of life. Others remain skeptical about the effectiveness of such spending based on both experimental evidence and the observation that geographic within-country variations in spending are not correlated with variations in mortality.
Article
The Economics of Long-Term Care
Norman Bannenberg, Martin Karlsson, and Hendrik Schmitz
Long-term care (LTC) is arguably the sector of the economy that is most sensitive to population aging: its recipients are typically older than 80 years whereas most care providers are of working age. Thus, a number of ongoing societal trends interact in the determination of market outcomes in the LTC sector: trends in longevity and healthy life expectancy interact with changing family structures and norms in shaping the need for services. The supply side is additionally affected by changes in employment patterns, in particular regarding the transition into retirement, as well as by cross-regional imbalances in demographic and economic conditions. The economic literature on long-term care considers many of these issues, aims at understanding this steadily growing sector, and at guiding policy. Key economic studies on long-term care address determinants of the demand for long-term care, like disability and socio-economic status; the two most important providers: informal family caregivers and nursing homes; and the financing and funding of LTC.
Article
Economic Studies on the Opioid Crisis: Costs, Causes, and Policy Responses
Johanna Catherine Maclean, Justine Mallatt, Christopher J. Ruhm, and Kosali Simon
The United States has experienced an unprecedented crisis related to the misuse of and addiction to opioids. As of 2018, 128 Americans die each day of an opioid overdose, and total economic costs associated with opioid misuse are estimated to be more than $500 billion annually. The crisis evolved in three phases, starting in the 1990s and continuing through 2010 with a massive increase in use of prescribed opioids associated with lax prescribing regulations and aggressive marketing efforts by the pharmaceutical industry. A second phase included tightening restrictions on prescribed opioids, reformulation of some commonly misused prescription medications, and a shift to heroin consumption over the period 2010 to 2013. Since 2013, the third phase of the crisis has included a movement toward synthetic opioids, especially fentanyl, and a continued tightening of opioid prescribing regulations, along with the growth of both harm reduction and addiction treatment access policies, including a possible 2021 relaxation of buprenorphine prescribing regulations.
Economic research, using innovative frameworks, causal methods, and rich data, has added to our understanding of the causes and consequences of the crisis. This body of research identifies intended and unintended impacts of policies designed to address the crisis. Although there is general agreement that the causes of the crisis include a combination of supply- and demand-side factors, and interactions between them, there is less consensus regarding the relative importance of each. Studies show that regulations can reduce opioid prescribing but may have less impact on root causes of the crisis and, in some cases, have spillover effects resulting in greater use of more harmful substances obtained in illicit markets, where regulation is less possible. There are effective opioid use disorder treatments available, but access, stigma, and cost hurdles have stifled utilization, resulting in a large degree of under-treatment in the United States.
How challenges brought about by the COVID-19 pandemic may intersect with the opioid crisis is unclear. Emerging areas for future research include understanding how societal and health care systems disruptions affect opioid use, as well as which regulations and policies most effectively reduce potentially inappropriate prescription opioid use and illicit opioid sources without unintended negative consequences.
Article
The Effect of Government Policy on Pharmaceutical Drug Innovation
Ayman Chit and Paul Grootendorst
Drug companies are profit-maximizing entities, and profit is, by definition, revenue less cost. Here we review the impact of government policies that affect sales revenues earned on newly developed drugs and the impact of policies that affect the cost of drug development. The former policies include intellectual property rights, drug price controls, and the extension of public drug coverage to previously underinsured groups. The latter policies include regulations governing drug safety and efficacy, R&D tax credits, publicly funded basic research, and public funding for open drug discovery consortia.
The latter policy, public funding of research consortia that seek to better understand the cellular pathways through which new drugs can ameliorate disease, appears very promising. In particular, a better understanding of human pathophysiology may be able to address the high failure rate of drugs undergoing clinical testing. Policies that expand market size by extending drug insurance to previously underinsured groups also appear to be effective at increasing drug R&D. Expansions of pharmaceutical intellectual property rights seem to be less effective, given the countervailing monopsony power of large public drug plans.
Article
The Effect of Immigration on Education
Giorgio Brunello
Does a higher share of immigrants affect the school performance of both immigrants and natives? Do desegregation policies improve efficiency? The existing evidence suggests that a higher share of immigrants has a negative (and often sizable) effect on the school performance of immigrants and a negative but probably small effect on the performance of natives. When average school performance is considered, this asymmetry generates concave peer effects, a key condition for the efficiency of desegregating policies. The broad message from the empirical literature is that these policies are not only equitable, in that they provide better opportunities to individuals with relatively low parental background, but also efficient.
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