Essays on the Effects of Social Insurance for Disability

This dissertation examines how social insurance, family support and work capacity enhance individuals' economic well-being following significant health and income shocks. I first examine the extent to which the liquidity-enhancing effects of Worker's Compensation (WC) benefits outweigh the moral hazard costs. Analyzing administrative data from Oregon, I estimate a hazard model exploiting variation in the timing and size of a retroactive lump-sum WC payment to decompose the elasticity of claim duration with respect to benefits into the elasticity with respect to an increase in cash on hand, and a decrease in the opportunity cost of missing work. I find that the liquidity effect accounts for 60 to 65 percent of the increase in claim duration among lower-wage workers, but less than half of the increase for higher earners. Using the framework from Chetty (2008), I conclude that the insurance value of WC exceeds the distortionary cost, and increasing the benefit level could increase social welfare. Next, I investigate how government-provided disability insurance (DI) interacts with private transfers to disabled individuals from their grown children. Using the Health and Retirement Study, I estimate a fixed effects, difference in differences regression to compare transfers between DI recipients and two control groups: rejected applicants and a reweighted sample of disabled non-applicants. I find that DI reduces the probability of receiving a transfer by no more than 3 percentage points, or 10 percent. Additional analysis reveals that DI could increase the probability of receiving a transfer in cases where children had limited prior information about the disability, suggesting that DI could send a welfare-improving information signal. Finally, Zachary Morris and I examine how a functional assessment could complement medical evaluations in determining eligibility for disability benefits and in targeting return to work interventions. We analyze claimants' self-reported functional capacity in a survey of current DI beneficiaries to estimate the share of disability claimants able to do work-related activity. We estimate that 13 percent of current DI beneficiaries are capable of work-related activity. Furthermore, other characteristics of these higher-functioning beneficiaries are positively correlated with employment, making them an appropriate target for return to work interventions.

Multiple sulfur isotope fractionations in inorganic aqueous systems

New constraints on isotope fractionation factors in inorganic aqueous sulfur systems based on theoretical and experimental techniques relevant to studies of the sulfur cycle in modern environments and the geologic rock record are presented in this dissertation. These include theoretical estimations of equilibrium isotope fractionation factors utilizing quantum mechanical software and a water cluster model approach for aqueous sulfur compounds that span the entire range of oxidation state for sulfur. These theoretical calculations generally reproduce the available experimental determinations from the literature and provide new constraints where no others are available. These theoretical calculations illustrate in detail the relationship between sulfur bonding environment and the mass dependence associated with equilibrium isotope exchange reactions involving all four isotopes of sulfur. I additionally highlight the effect of isomers of protonated compounds (compounds with the same chemical formula but different structure, where protons are bound to either sulfur or oxygen atoms) on isotope partitioning in the sulfite (S4+) and sulfoxylate (S2+) systems, both of which are key intermediates in oxidation-reduction processes in the sulfur cycle. I demonstrate that isomers containing the highest degree of coordination around sulfur (where protonation occurs on the sulfur atom) have a strong influence on isotopic fractionation factors, and argue that isomerization phenomenon should be considered in models of the sulfur cycle. Additionally, experimental results of the reaction rates and isotope fractionations associated with the chemical oxidation of aqueous sulfide are presented. Sulfide oxidation is a major process in the global sulfur cycle due largely to the sulfide-producing activity of anaerobic microorganisms in organic-rich marine sediments. These experiments reveal relationships between isotope fractionations and reaction rate as a function of both temperature and trace metal (ferrous iron) catalysis that I interpret in the context of the complex mechanism of sulfide oxidation. I also demonstrate that sulfide oxidation is a process associated with a mass dependence that can be described as not conforming to the mass dependence typically associated with equilibrium isotope exchange. This observation has implications for the inclusion of oxidative processes in environmental- and global-scale models of the sulfur cycle based on the mass balance of all four isotopes of sulfur. The contents of this dissertation provide key reference information on isotopic fractionation factors in aqueous sulfur systems that will have far-reaching applicability to studies of the sulfur cycle in a wide variety of natural settings.

Essays on Market Frictions and Securitization

This dissertation provides a novel theory of securitization based on intermediaries minimizing the moral hazard that insiders can misuse assets held on-balance sheet. The model predicts how intermediaries finance different assets. Under deposit funding, the moral hazard is greatest for low-risk assets that yield sizable returns in bad states of nature; under securitization, it is greatest for high-risk assets that require high guarantees and large reserves. Intermediaries thus securitize low-risk assets. In an extension, I identify a novel channel through which government bailouts exacerbate the moral hazard and reduce total investment irrespective of the funding mode. This adverse effect is stronger under deposit funding, implying that intermediaries finance more risky assets off-balance sheet. The dissertation discusses the implications of different forms of guarantees. With explicit guarantees, banks securitize assets with either low information-intensity or low risk. By contrast, with implicit guarantees, banks only securitize assets with high information-intensity and low risk. Two extensions to the benchmark static and dynamic models are discussed. First, an extension to the static model studies the optimality of tranching versus securitization with guarantees. Tranching eliminates agency costs but worsens adverse selection, while securitization with guarantees does the opposite. When the quality of underlying assets in a certain security market is sufficiently heterogeneous, and when the highest quality assets are perceived to be sufficiently safe, securitization with guarantees dominates tranching. Second, in an extension to the dynamic setting, the moral hazard of misusing assets held on-balance sheet naturally gives rise to the moral hazard of weak ex-post monitoring in securitization. The use of guarantees reduces the dependence of banks' ex-post payoffs on monitoring efforts, thereby weakening monitoring incentives. The incentive to monitor under securitization with implicit guarantees is the weakest among all funding modes, as implicit guarantees allow banks to renege on their monitoring promises without being declared bankrupt and punished.