We study tax loss asymmetry for S corporate owners. These owners use most losses contemporaneously, reducing the tax asymmetry compared to C corporations. However, these owners face distortions due to the progressive individual tax schedule. The value of this asymmetry is approximately $3.5 billion per year. We find that this asymmetry creates disincentives for risky investment and causes allocative inefficiencies among loss and gains owners. Finally, we simulate the effects of certain provisions of the Tax Cuts and Jobs Act; we estimate that these provisions—especially section 199A—reduce the behavioral distortions of the asymmetry for S corporate owners. (JEL D22, G32, H25, H32, K34)
{"title":"Implications of Tax Loss Asymmetry for Owners of S Corporations","authors":"Lucas Goodman, Elena Patel, Molly Saunders-Scott","doi":"10.1257/pol.20200311","DOIUrl":"https://doi.org/10.1257/pol.20200311","url":null,"abstract":"We study tax loss asymmetry for S corporate owners. These owners use most losses contemporaneously, reducing the tax asymmetry compared to C corporations. However, these owners face distortions due to the progressive individual tax schedule. The value of this asymmetry is approximately $3.5 billion per year. We find that this asymmetry creates disincentives for risky investment and causes allocative inefficiencies among loss and gains owners. Finally, we simulate the effects of certain provisions of the Tax Cuts and Jobs Act; we estimate that these provisions—especially section 199A—reduce the behavioral distortions of the asymmetry for S corporate owners. (JEL D22, G32, H25, H32, K34)","PeriodicalId":48093,"journal":{"name":"American Economic Journal-Economic Policy","volume":"46 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-02-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"136252467","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Yiming Cao, Raymond J. Fisman, Hui Lin, Yongxiang Wang
We study how Chinese state bank managers’ lending incentives impact lending to state-owned enterprises (SOEs). We show lending quantity increases and quality decreases at month’s end, indicating monthly lending targets that decrease lending standards. Increased quantity comes from both SOEs and private lending, whereas decreased quality is from only SOEs, which continue to receive loans even after prior defaults (particularly at month’s end). We suggest that SOE lending may thus be beneficial for state bank managers, who lend to delinquent state enterprises to meet targets, which in turn may exacerbate SOEs’ soft budget constraints. (JEL G21, G28, L32, O16, P34).
{"title":"SOEs and Soft Incentive Constraints in State Bank Lending","authors":"Yiming Cao, Raymond J. Fisman, Hui Lin, Yongxiang Wang","doi":"10.1257/pol.20200873","DOIUrl":"https://doi.org/10.1257/pol.20200873","url":null,"abstract":"We study how Chinese state bank managers’ lending incentives impact lending to state-owned enterprises (SOEs). We show lending quantity increases and quality decreases at month’s end, indicating monthly lending targets that decrease lending standards. Increased quantity comes from both SOEs and private lending, whereas decreased quality is from only SOEs, which continue to receive loans even after prior defaults (particularly at month’s end). We suggest that SOE lending may thus be beneficial for state bank managers, who lend to delinquent state enterprises to meet targets, which in turn may exacerbate SOEs’ soft budget constraints. (JEL G21, G28, L32, O16, P34).","PeriodicalId":48093,"journal":{"name":"American Economic Journal-Economic Policy","volume":"40 1","pages":""},"PeriodicalIF":5.3,"publicationDate":"2023-02-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"81388022","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper estimates the causal impact of a sizable German public investment program on employment at the county level. The program focused on improving the energy efficiency of school buildings, making it possible to use the number of schools as an instrument for investments. It also enforced tight deadlines, reducing potential implementation lags. The program was cost-effective, creating, on average, one job for one year for an investment of €24,000. The employment gains are detectable after nine months and are accompanied by an unemployment reduction amounting to half of the job creation. Employment grew predominately in the directly affected industries. (JEL E24, E32, E62, H54, J23, R23)
{"title":"The Employment Effects of Countercyclical Public Investments","authors":"L. Buchheim, M. Watzinger","doi":"10.1257/pol.20180323","DOIUrl":"https://doi.org/10.1257/pol.20180323","url":null,"abstract":"This paper estimates the causal impact of a sizable German public investment program on employment at the county level. The program focused on improving the energy efficiency of school buildings, making it possible to use the number of schools as an instrument for investments. It also enforced tight deadlines, reducing potential implementation lags. The program was cost-effective, creating, on average, one job for one year for an investment of €24,000. The employment gains are detectable after nine months and are accompanied by an unemployment reduction amounting to half of the job creation. Employment grew predominately in the directly affected industries. (JEL E24, E32, E62, H54, J23, R23)","PeriodicalId":48093,"journal":{"name":"American Economic Journal-Economic Policy","volume":"GE-19 1","pages":""},"PeriodicalIF":5.3,"publicationDate":"2023-02-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"84608819","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Data from an 18-month randomized trial show large and sustained impacts on water purification and child health of a program providing monthly coupons for free water treatment solution to households with young children. The program is more effective and much more cost effective than asking Community Health Workers (CHWs) to distribute free chlorine to households during routine monthly visits. This is because only 40 percent of households use free chlorine, targeting through CHWs is worse than self-targeting through coupon redemption, and water treatment promotion by CHWs does not increase chlorine use among beneficiaries of free chlorine. (JEL I12, I18, J13, O12, O13, Q53)
{"title":"Expanding Access to Clean Water for the Rural Poor: Experimental Evidence from Malawi","authors":"Pascaline Dupas, Basimenye Nhlema, Zachary Wagner, Aaron Wolf, Emily Wroe","doi":"10.1257/pol.20210121","DOIUrl":"https://doi.org/10.1257/pol.20210121","url":null,"abstract":"Data from an 18-month randomized trial show large and sustained impacts on water purification and child health of a program providing monthly coupons for free water treatment solution to households with young children. The program is more effective and much more cost effective than asking Community Health Workers (CHWs) to distribute free chlorine to households during routine monthly visits. This is because only 40 percent of households use free chlorine, targeting through CHWs is worse than self-targeting through coupon redemption, and water treatment promotion by CHWs does not increase chlorine use among beneficiaries of free chlorine. (JEL I12, I18, J13, O12, O13, Q53)","PeriodicalId":48093,"journal":{"name":"American Economic Journal-Economic Policy","volume":"1 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-02-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"136019484","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Housing is mostly exempted from Medicaid and Supplemental Social Insurance means tests. Reforms of this special treatment have been debated, but little is known about its costs, benefits, and redistributive implications. I estimate a life cycle model of single retirees accounting for this exemption. It shows that the homestead exemption explains important patterns of Medicaid recipiency and that it is highly valued. It also shows that estate recovery could cover most of its costs with possibly limited negative welfare consequences. Finally, the model predicts that removing the homestead exemption or enforcing estate recovery programs would reduce redistribution toward lower-income retirees. (JEL D15, G51, H51, I13, I18, I38, J26)
{"title":"Housing in Medicaid: Should It Really Change?","authors":"Bertrand Achou","doi":"10.1257/pol.20200178","DOIUrl":"https://doi.org/10.1257/pol.20200178","url":null,"abstract":"Housing is mostly exempted from Medicaid and Supplemental Social Insurance means tests. Reforms of this special treatment have been debated, but little is known about its costs, benefits, and redistributive implications. I estimate a life cycle model of single retirees accounting for this exemption. It shows that the homestead exemption explains important patterns of Medicaid recipiency and that it is highly valued. It also shows that estate recovery could cover most of its costs with possibly limited negative welfare consequences. Finally, the model predicts that removing the homestead exemption or enforcing estate recovery programs would reduce redistribution toward lower-income retirees. (JEL D15, G51, H51, I13, I18, I38, J26)","PeriodicalId":48093,"journal":{"name":"American Economic Journal-Economic Policy","volume":"1 1","pages":""},"PeriodicalIF":5.3,"publicationDate":"2023-02-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"82156674","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Enrico Miglino, Nicolás Navarrete H., Gonzalo Navarrete H., Pablo Navarrete H.
We estimate the effect of a permanent income increase on the health outcomes of the elderly poor. Our regression discontinuity design exploits an eligibility cutoff in a Chilean basic pension program that grants monthly payments to retirees without a contributory pension. Using administrative data, we find that four years after applying, basic pension recipients are 2.7 percentage points less likely to have died. Survey evidence suggests an increase in food consumption and visits to health centers as relevant drivers of the mortality reduction. (JEL D63, G51, I12, I14, I38, J14, O15)
{"title":"Health Effects of Increasing Income for the Elderly: Evidence from a Chilean Pension Program","authors":"Enrico Miglino, Nicolás Navarrete H., Gonzalo Navarrete H., Pablo Navarrete H.","doi":"10.1257/pol.20200076","DOIUrl":"https://doi.org/10.1257/pol.20200076","url":null,"abstract":"We estimate the effect of a permanent income increase on the health outcomes of the elderly poor. Our regression discontinuity design exploits an eligibility cutoff in a Chilean basic pension program that grants monthly payments to retirees without a contributory pension. Using administrative data, we find that four years after applying, basic pension recipients are 2.7 percentage points less likely to have died. Survey evidence suggests an increase in food consumption and visits to health centers as relevant drivers of the mortality reduction. (JEL D63, G51, I12, I14, I38, J14, O15)","PeriodicalId":48093,"journal":{"name":"American Economic Journal-Economic Policy","volume":"74 1","pages":""},"PeriodicalIF":5.3,"publicationDate":"2023-02-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"88951549","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
In April 2014 Flint, Michigan switched its drinking water supply from the Detroit water system to the Flint River as a temporary means to save $5 million. Over 18 months it was revealed that the switch exposed residents to dangerous levels of lead, culminating in an emergency declaration in October 2015. This paper examines the impact of this crisis on the Flint housing market. The value of Flint’s housing stock has fallen by $520 million to $559 million despite over $400 million in remediation spending. Home prices remain depressed through August 2019, 16 months after the water was declared safe for consumption. (JEL H12, I12, Q25, Q51, Q53, R31)
{"title":"Economic Effects of Environmental Crises: Evidence from Flint, Michigan","authors":"Gabriel Lade","doi":"10.1257/pol.20190391","DOIUrl":"https://doi.org/10.1257/pol.20190391","url":null,"abstract":"In April 2014 Flint, Michigan switched its drinking water supply from the Detroit water system to the Flint River as a temporary means to save $5 million. Over 18 months it was revealed that the switch exposed residents to dangerous levels of lead, culminating in an emergency declaration in October 2015. This paper examines the impact of this crisis on the Flint housing market. The value of Flint’s housing stock has fallen by $520 million to $559 million despite over $400 million in remediation spending. Home prices remain depressed through August 2019, 16 months after the water was declared safe for consumption. (JEL H12, I12, Q25, Q51, Q53, R31)","PeriodicalId":48093,"journal":{"name":"American Economic Journal-Economic Policy","volume":"4 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-02-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"136019482","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Nonexclusive sequential borrowing can increase default and impose externalities on prior lenders. We document that sequential banking is pervasive with substantial effects. Using credit card applications from a large bank and data on the applicants’ entire loan portfolios, we find that an additional credit line causes a 5.9 percentage point decline in default for high-score borrowers on previous loans. However, for low-score borrowers, it causes a 19 percentage point increase. The former use the new credit to smooth payments on preexisting loans, while the latter increase their total debt. These results have implications for “ no-universal-default” regulation and financial inclusion. (JEL D62, D82, G21, G51)
{"title":"The Extension of Credit with Nonexclusive Contracts and Sequential Banking Externalities","authors":"G. De Giorgi, Andrés Drenik, Enrique Seira","doi":"10.1257/pol.20200220","DOIUrl":"https://doi.org/10.1257/pol.20200220","url":null,"abstract":"Nonexclusive sequential borrowing can increase default and impose externalities on prior lenders. We document that sequential banking is pervasive with substantial effects. Using credit card applications from a large bank and data on the applicants’ entire loan portfolios, we find that an additional credit line causes a 5.9 percentage point decline in default for high-score borrowers on previous loans. However, for low-score borrowers, it causes a 19 percentage point increase. The former use the new credit to smooth payments on preexisting loans, while the latter increase their total debt. These results have implications for “ no-universal-default” regulation and financial inclusion. (JEL D62, D82, G21, G51)","PeriodicalId":48093,"journal":{"name":"American Economic Journal-Economic Policy","volume":"7 1","pages":""},"PeriodicalIF":5.3,"publicationDate":"2023-02-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"87279049","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper evaluates the financial and economic consequences of being denied an abortion. We link credit report data to the Turnaway Study, which collected high-quality, longitudinal data on women receiving or being denied a wanted abortion in the United States. We compare financial outcomes over a ten-year period for women who had pregnancies just above and below a gestational age limit allowing for a wanted abortion. Outcomes evolved similarly for the two groups prior to the abortion encounter. Following the encounter, women who were denied an abortion experience a large increase in financial distress that remains for several years. (JEL G51, I18, J13, J16)
{"title":"The Economic Consequences of Being Denied an Abortion","authors":"Sarah Miller, Laura Wherry, Diana Foster","doi":"10.1257/pol.20210159","DOIUrl":"https://doi.org/10.1257/pol.20210159","url":null,"abstract":"This paper evaluates the financial and economic consequences of being denied an abortion. We link credit report data to the Turnaway Study, which collected high-quality, longitudinal data on women receiving or being denied a wanted abortion in the United States. We compare financial outcomes over a ten-year period for women who had pregnancies just above and below a gestational age limit allowing for a wanted abortion. Outcomes evolved similarly for the two groups prior to the abortion encounter. Following the encounter, women who were denied an abortion experience a large increase in financial distress that remains for several years. (JEL G51, I18, J13, J16)","PeriodicalId":48093,"journal":{"name":"American Economic Journal-Economic Policy","volume":"198 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-02-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"135499816","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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