The impact of Economics on health policy and management in Spain

BackgroundDespite the intrinsic value of scientific disciplines, such as Economics, it is appropriate to gauge the impact of its applications on social welfare, or at least Health Economics (HE) case- its influence on health policy and management.MethodsThe three relevant features of knowledge (production, diffusion and application) are analyzed, more from an emic perspective the one used in Anthropology relying on the experience of the members of a culture- than from an etic approach seated on material descriptions and dubious statistics.ResultsThe soundness of the principles and results of HE depends on its disciplinary foundations,whereas its relevance than does not imply translation into practice- is more linked with the problems studied. Important contributions from Economics to the health sphere are recorded.HE in Spain ranks seventh in the world despite the relatively minor HE contents of its clinical and health services research journals.HE has in Spain more presence than influence, having failed to impregnate sufficiently thedaily events.ConclusionsHE knowledge required by a politician, a health manager or a clinician is rather limited; the main impact of HE could be to develop their intuition and awareness.

Stable sunspot equilibria in a cash-in-advance economy

We analyze a monetary model with flexible labor supply, cash-inadvance constraints and seigniorage-financed government deficits. If the intertemporal elasticity of substitution of labor is greater than one, there are two steady states, one determinate and the other indeterminate. If the elasticity is less than one, there is a unique steady state, which can be indeterminate. Only in the latter case do there exist sunspot equilibria that are stable under adaptive learning. A sufficient reduction in government purchases can in many cases eliminate the sunspot equilibria while raising consumption/labor taxes even enough to balance the budget may fail to achieve determinacy.

The determinants of the prevalence of single mothers: A cross-country analysis

This paper examines the effect of public assistance, labor market and marriage marketconditions on the prevalence of single mother families across countries and over time. Amultinomial logit derived from a random utility approach is estimated using individualleveldata for 14 countries. I find evidence that increases in the level of public support are significantly and positively associated with a higher incidence of both never marriedand divorced mothers. The results also suggest that single mothers are more prevalentwhen female wages are lower. Higher male earnings and employment opportunities in awoman s marriage market appear to lead to fewer never married mothers, but more divorced mothers. Higher child support or alimony payments are associated with a higher prevalence of divorced mothers.

Migration across Spanish provinces: Evidence from the social security records (1978-1992)

This paper uses Social Security records to study internal migrationin Spain. This is the first paper that uses this data source, whichhas some advantages with respect to existing data sources: it includesonly job-seeking migrants and it allows to identify temporary migration. Within the framework of an extended gravity model, we estimate a Generalized Negative Binomial regression on gross migration flows between provinces. We quantify the effect of local labor market imbalances on workers' mobility and discuss the equilibrating role of internal migration in Spain. Our main results show that the effect of employment opportunities have changed after 1984; migrants seem to be more responsive to economic conditions but, consistently with previous studies for the Spanish labor market, the migration response to wage differentials is wrongly signed. Our analysis also confirms the larger internal mobility of highly qualified workers.

How do very open economies adjust to large immigration flows? Recent evidence from Spanish regions

In recent years, Spain has received unprecedented immigration flows. Between 2001 and 2006 the fraction of the population born abroad more than doubled, increasing from4.8% to 10.8%. For Spanish provinces with above-median inflows (relative to population),immigration increased by 24% the number of high school dropouts while only increasingcollege graduates by 11%. We study different channels by which regional labor markets haveabsorbed the large increase in relative supply of low educated workers. We identify theexogenous supply shock using historical immigrant settlement patterns by country of origin.Using data from the Labor Force Survey and the decennial Census, we find a large expansion ofemployment in high immigration regions. Disaggregating by industry, the absorption operatedthrough large increases in the share of low-educated workers, compared to the same industry inlow-immigration regions. We do not find changes in sectoral specialization. Overall, andperhaps surprisingly, the pattern of absorption is very similar to the one found in the US.

Indentifying human capital externalities: Theory with an application to US cities

The identification of aggregate human capital externalities is still not fully understood. The existing (Mincerian) approach confounds positive externalities with wage changes due to a downward sloping demand curve for human capital. As a result, it yields positive externalities even when wages equal marginal social products. We propose an approach that identifies human capital externalities whether or not aggregate demand for human capital slopes downward. Another advantage of our approach is that it does not require estimates of the individual return to human capital. Applications to US cities and states between 1970 and 1990 yield no evidence of significant average -schooling externalities.

Flexibility vs. rigidity: Does Spain have the worst of both worlds?

In this paper we study the structure of labor market flows in Spain and compare them with France and the US. We characterize a number of empirical regularities and stylized facts. One striking result is that the job finding rate is slightly higher than in France, while the jon loss rate is much higher, putting Spain half-way between France and the US. This suggests that while Spain has borne the full cost of its labor market reforms in terms of job precarity, the benefits in terms of job creation have been quite modest. We hypothesize that this has been due to the reform s credibility being imperfect, which leads toexpectation of reversal.

A model of collateral, investment and adverse selection

This paper characterizes the relationship between entrepreneurial wealth and aggregate investmentunder adverse selection. Its main finding is that such a relationship need not bemonotonic. In particular, three results emerge from the analysis: (i) pooling equilibria, in whichinvestment is independent of entrepreneurial wealth, are more likely to arise when entrepreneurialwealth is relatively low; (ii) separating equilibria, in which investment is increasing inentrepreneurial wealth, are most likely to arise when entrepreneurial wealth is relatively highand; (iii) for a given interest rate, an increase in entrepreneurial wealth may generate a discontinuousfall in investment.

Strike outcomes and wage settlements in Spain

This paper analyzes collective bargaining using Spanish firm level data. Centralto the analysis are the joint determination of wage and strike outcomes in adynamic framework and the possibility of segregate wage equation for strike andnon-strike outcomes. Conditional to strikes taking place, we confirm a negativerelationship between strike duration and wage changes in a dynamic context.Furthermore, we find selection in wage equations induced by the strike outcome.In this sense, the possibility of wage determination processes being differentin strike and non-strike samples is not rejected by the data. In particular,wage dynamics are of opposite sing in both strike and non-strike equations.Finally, we find evidence of a 0.33 percentage points wage change strike premium.

The macroeconomic effects of oil price shocks: Why are the 2000s so different from the 1970s?

We characterize the macroeconomic performance of a set of industrialized economies in the aftermath of the oil price shocks of the 1970s and of the last decade, focusing on the differences across episodes. We examine four different hypotheses for the mild effects on inflation and economic activity of the recent increase in the price of oil: (a) good luck (i.e. lack of concurrent adverse shocks), (b) smaller share of oil in production, (c) more flexible labor markets, and (d) improvements in monetary policy. Weconclude that all four have played an important role.

The three horsemen of riches: Plague, war and urbanization in early modern Europe

How did Europe escape the "Iron Law of Wages?" We construct a simple Malthusian model withtwo sectors and multiple steady states, and use it to explain why European per capita incomes andurbanization rates increased during the period 1350-1700. Productivity growth can only explain a smallfraction of the rise in output per capita. Population dynamics changes of the birth and death schedules were far more important determinants of steady states. We show how a major shock to population cantrigger a transition to a new steady state with higher per-capita income. The Black Death was such ashock, raising wages substantially. Because of Engel's Law, demand for urban products increased, andurban centers grew in size. European cities were unhealthy, and rising urbanization pushed up aggregatedeath rates. This effect was reinforced by diseases spread through war, financed by higher tax revenues.In addition, rising trade also spread diseases. In this way higher wages themselves reduced populationpressure. We show in a calibration exercise that our model can account for the sustained rise in Europeanurbanization as well as permanently higher per capita incomes in 1700, without technological change.Wars contributed importantly to the "Rise of Europe", even if they had negative short-run effects. We thustrace Europe s precocious rise to economic riches to interactions of the plague shock with the belligerentpolitical environment and the nature of cities.

When are layoffs acceptable? Evidence from a quasi-experiment

Many authors have discussed a decline in internal labor markets and an apparent shift to a new employment contract, characterized by less commitment between employer and employee and more portable skills. These discussions occur without much evidence on what employment contract employees currently feel is fair. We perfomed quasi-experimental surveys to study when employees in the U.S. andCanada feel that layoffs are fair.Layoffs were perceived as more fair if they were due to lower product demand than if the result of employee suggestions. This result appears to be solely due to norms of reciprocity (companiesshould not punish employees for their efforts), rather than norms of sharing rents, as new technology was also considered a justification for layoffs.Consistent with theories of distributive and procedural equity, layoffs were perceived as more fair if the CEO voluntarily shared the pain. CEO bonuses due to layoffs lowered their reported fairness only slightly.Respondents in Silicon Valley were not more accepting of layoffsthan were those in Canada on average, although the justificationsconsidered valid differed slightly.

Will EMU increase eurosclerosis?

In this paper we study the relationship between labor market institutions and monetary policy. We use a simple macroeconomic framework to show how optimal monetary policy rules depend on labor institutions (labor adjustment costs, and nominal and real wage rigitidy) and social preferences regarding inflation, employment, and real wages. We also calibrate our model tocompute how the change in social welfare brought about by giving up monetary policy as a result of joining the Economic and Monetary Union (EMU) depends on institutions and preferences. We then use the calibrated model to analyze how EMU affects the incentives for labor market reform, both for reformsthat increase the economy's adjustment potential and for those that affect the long-run unemployment rate.

Insurance and safety after September 11, 2001: Coming to grips with the costs and threats of terrorism

This chapter, originally written as a consequence of the terrorist attacksof September 11, 2001, provides an elementary, everyday introduction tothe concepts of risk and insurance. Conceptually, risk has two dimensions:a potential loss, and the chance of that loss being realized. People can,however, transfer risk to insurance companies against the payment ofso-called premiums. In practice, however, one needs accurate assessmentsof both losses and probabilities to judge whether premiums are appropriate.For many risks, this poses little problem (e.g., life insurance); however,it is difficult to assess risks of many other kinds of events such as actsof terrorism. It is emphasized, that through evolution and learning, peopleare able to handle many of the common risks that they face in life. Butwhen people lack experience (e.g., new technologies, threats of terrorism),risk can only be assessed through imagination. Not surprisingly, insurancecompanies demand high prices when risks are poorly understood. In particular,the cost of insurance against possible acts of terrorism soared afterSeptember 11. How should people approach risk after the events of that day?Clearly, the world needs to protect itself from the acts of terrorists andother disturbed individuals. However, it is also important to address the root causes of such antisocial movements. It is, therefore, suggested thatprograms addressed at combatting ignorance, prejudice, and socialinequalities may be more effective premiums for reducing the risk ofterrosrtism than has been recognized to date.

Immigration policy with partisan parties

This paper analyzes the political economy of immigration when the salient electoralissue is the level of immigrants and the relevant immigration policy is the expenditurein immigration control. We consider that immigration affects voters? welfarethrough economic and non economic factors. We model political competition `a laWittman with the ideology of parties endogenously determined at equilibrium. Atequilibrium, parties propose different levels of immigration, located to the left and tothe right of the median voter?s ideal point, and combine skilled and unskilled workersamong their constituencies. Numerical simulations provide the levels of immigrationproposed by the two parties and the composition of parties? constituencies as we varythe efficacy of immigration control and the intensity of immigration aversion.