SELECTED FOR YOU... MAY 2010: books of the month - working papers

All the Selected for you


Pharmaceutical innovation : incentives, competition, and cost-benefit analysis in international perspectives.
L'innovation dans le domaine des médicaments : incitations, concurrence et analyse-coût-bénéfice dans une perspective internationale.

Sloan F.A. / éd., Hsieh C.R. / éd.
New York : Cambridge University Press : 2007 : 331 p.

The pharmaceutical industry worldwide is a rapidly burgeoning industry contributing to growth of gross domestic product and employment. Technological change in this field has been very rapid, with many new products being introduced. For this reason in part, health care budgets throughout the world have increased dramatically, eliciting growing pressures for cost containment. This book explores four important issues in pharmaceutical innovations: (1) the industry structure of pharmaceutical innovation; (2) incentives for correcting market failures in allocating resources for research and development; (3) competition and marketing; and (4) public evaluation of the benefits and costs of innovation. The lessons are applicable to countries all over the world, at all levels of economic development. By discussing existing evidence this book proposes incentive arrangements to accomplish social objectives (4e de couverture.)

Tackling Chronic Disease in Europe. Strategies, interventions and challenges.
Combattre les maladies choniques en Europe. Stratégies, interventions et défis.

Busse R., Blumel M., Scheller-Kreinsen D., Zentner A.
Copenhague : OMS Bureau régional de l'Europe

Chronic conditions and diseases are the leading cause of mortality and morbidity in Europe, accounting for 86% of total premature deaths, and research suggests that complex conditions such as diabetes and depression will impose an even greater health burden in the future – and not only for the rich and elderly in high-income countries, but increasingly for the poor as well as low- and middle-income countries. The epidemiologic and economic analyses in the first part of the book suggest that policy-makers should make chronic disease a priority. This book highlights the issues and focuses on the strategies and interventions that policy-makers have at their disposal to tackle this increasing challenge. Strategies discussed in the second part of this volume include prevention and early detection, new provider qualifications (e.g. nurse practitioners) and settings, disease management programmes and integrated care models. But choosing the right strategies will be difficult, particularly given the limited evidence on effectiveness and cost-effectiveness. In the third part, the book therefore outlines and discusses institutional and organizational challenges for policy-makers and managers: stimulating the development of new effective pharmaceuticals and medical devices, designing appropriate financial incentives, improving coordination, using information and communication technology, and ensuring evaluation. To tackle these challenges successfully, key policy recommendations are made.

Towards enabling geographies : disabled bodies and minds in society and space.
Vers une géographie appliquée : corps et esprits handicapés dans la société et l'espace.

Chouinard V. / éd., Hall E. / éd., Wilton R. / éd.
Farnham : Asghate Publishing Limited : 2010 : 12-270 p.

Over the past 15 years, geography has made many significant contributions to our understanding of disabled people's identities, lives, and place in society and space. 'Towards Enabling Geographies' brings together leading scholars to showcase the 'second wave' of geographical studies concerned with disability and embodied differences. This area has broadened and challenged conventional boundaries of 'disability', expanding the kinds of embodied differences considered, while continuing to grapple with important challenges such as policy relevance and the use of more inclusionary research approaches. This book demonstrates the value of a spatial conceptualization of disability and disablement to a broader social science audience, whilst examining how this conceptualization can be further developed and refined (4e de couverture.).

Health and social justice.
Santé et justice sociale.

Prah Ruger J.
Oxford : Oxford University Press : 2010 : 276 p.

Societies make decisions and take actions that profoundly impact the distribution of health. Why and how should collective choices be made, and policies implemented, to address health inequalities under conditions of resource scarcity? How should societies conceptualize and measure health disparities, and determine whether they've been adequately addressed? Who is responsible for various aspects of this important social problem? The author elucidates principles to guide these decisions, the evidence that should inform them, and the policies necessary to build equitable and efficient health systems world-wide. This book weaves together original insights and disparate constructs to produce a foundational new theory, the health capability paradigm. Ruger's theory takes the ongoing debates about the theoretical underpinnings of national health disparities and systems in striking new directions. It shows the limitations of existing approaches (utilitarian, libertarian, Rawlsian, communitarian), and effectively balances a consequentialist focus on health outcomes and costs with a proceduralist respect for individuals' health agency. Through what Ruger calls shared health governance, it emphasizes responsibility and choice. It allows broader assessment of injustices, including attributes and conditions affecting individuals' "human flourishing," as well as societal structures within which resource distribution occurs. Addressing complex issues at the intersection of philosophy, economics, and politics in health, this fresh perspective bridges the divide between the collective and the individual, between personal freedom and social welfare, equality and efficiency, and science and economics (Tiré de l'introduction).

The healing of America. A global quest for better, cheaper, and fairer health care.
La guérison de l'Amérique. Une quête globale pour des soins de meilleure qualité, moins chers et plus justes.

Reid T.R.
New York : The Penguin Press : 2009 : 277 p.

This book shows how all the other industrialized democracies have achieved something the United States can't seem to do: provide health care for everybody at a reasonable cost. In his global quest to find a possible prescription, its visits wealthy, free market, industrialized democracies like our own—including France, Germany, Japan, the U.K., and Canada—where he finds inspiration in example. Reid shares evidence from doctors, government officials, health care experts, and patients the world over, finding that foreign health care systems give everybody quality care at an affordable cost. And that dreaded monster “socialized medicine” turns out to be a myth. Many developed countries provide universal coverage with private doctors, private hospitals, and private insurance.In addition to long-established systems, Reid also studies countries that have carried out major health care reform. The first question facing these countries—and the United States, for that matter—is an ethical issue: Is health care a human right? Most countries have already answered with a resolute yes, leaving the United States in the murky moral backwater with nations we typically think of as far less just than our own (Résumé de l'éditeur).


Access to care

Health care utilization among immigrants and native-born populations in 11 European countries. Results from the Survey of Health, Ageing and Retirement in Europe.
Recours aux soins de santé chez les migrants et les populations indigènes dans 11 pays européens. Résultats de l'enquête Santé, vieillissement et retraite en Europe (enquête SHARE).

Sole-Auro A., Guillen M., Crimmins E.M.
Barcelone : University of Barcelona. Department of Econometrics and Statistics : 2009/10 : 29 p.

This study examines health care utilization of immigrants relative to the native-born populations aged 50 years and older in eleven European countries. Methods. We analyzed data from the Survey of Health Aging and Retirement in Europe (SHARE) from 2004 for a sample of 27,444 individuals in 11 European countries. Negative Binomial regression was conducted to examine the difference in number of doctor visits, visits to General Practitioners (GPs), and hospital stays between immigrants and the native-born individuals. Results: We find evidence those immigrants above age 50 use health services on average more than the native-born populations with the same characteristics. Our models show immigrants have between 6% and 27% more expected visits to the doctor, GP or hospital stays when compared to native-born populations in a number of European countries. Discussion: Elderly immigrant populations might be using health services more intensively due to cultural reasons.

Health care expenditures

Medical Consumption over the Life Cycle: Facts from a U.S. Medical Expenditure Panel Survey.
Medical Consumption over the Life Cycle: Facts from a U.S. Medical Expenditure Panel Survey

Jung J., Tran C.
Towsen : University of Townsen : 2010/04 : 36 p.

In this paper we construct life-cycle profiles of health care spending and financing using data from the Medical Expenditure Panel Survey (MEPS). We separate pure age effects from time and cohort effects by estimating a seminonparametric partial linear model. After controlling for time and cohort effects, we find that medical expenditure age profiles follow an upward trend whereas private insurance take-up profiles over age exhibit a hump-shape. In addition, we find that time effects (i.e. productivity effects, business cycle effects, etc.) dominate cohort effects (i.e. initial condition effects) in size despite the fact that we adjust for inflation in the variables measuring medical expenditures. Health expenditure profiles based on simple inflation adjusted values therefore overpredict the effects of age on health expenditures, especially for agents older than 60.

Health geography

Late-Life Decline in Well-Being Across Adulthood in Germany, the UK, and the US: Something is Seriously Wrong at the End of Life
Le lieu de résidence et de décès font une différence : disparités individuelles et géographique dans la progression du bien-être en fin de vie.

Gerstorf D., Ram N., Mayraz G., Hidajat M.
Berlin : DIW : 2010/04 : 25 p.

Throughout adulthood and old age, levels of well-being appear to remain relatively stable. However, evidence is emerging that late in life well-being declines considerably. Using long-term longitudinal data of deceased participants in national samples from Germany, the UK, and the US, we examine how long this period lasts. In all three nations and across the adult age range, well-being was relatively stable over age, but declined rapidly with impending death. Articulating notions of terminal decline associated with impending death, we identified prototypical transition points in each study between three and five years prior to death, after which normative rates of decline steepened by a factor of three or more. The findings suggest that mortality-related mechanisms drive late-life changes in well-being and highlight the need for further refinement of psychological concepts about how and when late-life declines in psychosocial functioning prototypically begin.


A structural equation model of adverse events and length of stay in hospitals.
Un modèle d'équation structurelle liant les évènements indésirables et la durée de séjour à l'hôpital.

Hauck K., Zhao X.
Melbourne : Monash University : 2010/02 : 26 p.

Adverse events in hospitals cause significant morbidity and mortality, and considerable effort has been invested into analysing their incidence and preventability. An unresolved issue in models of medical adverse events is potential endogeneity of length of stay (LOS): whilst the probability of suffering a medical adverse event during the episode is likely to increase as a patient stays longer, there are a range of unobservable patient and hospital factors affecting both the occurrence of adverse events and LOS, such as unobserved patient complexity and hospital management. Therefore, statistical models of adverse events which do not account for the potential endogeneity of LOS may generate biased estimates. Our objective is to examine the effects of risk factors on the incidence of adverse events using structural equation models and accounting for endogeneity of LOS. We estimate separate models for three of the most common and serious types of medical adverse events: adverse drug reactions, hospital acquired infections, and pressure ulcers. We use episode level administrative hospital data from public hospitals in the state of Victoria, Australia, for the years 2004/05 and 2005/06 with detailed information on patients, in particular medical complexity and adverse events suffered during admission. We use days and months of discharge as instruments for LOS. Our research helps assessing the costs and benefits of additional days spent in hospital. For example, it can contribute to identifying the ideal time of discharge of patients, or inform whether 'hospital at home' programs reduce rates of hospital acquired infections.

Adverse events in surgical inpatients: A comparative analysis of public hospitals in Victoria.
Les événements indésirables chez les patients subissant une opération chirugicale: une analyse comparée des hôpitaux publics de Victoria.

Hauck K., Zhao X., Jackson T.
Melbourne : Monash University : 2010/02 : 26 p.

We compare adverse event rates for surgical inpatients across 36 public hospitals in the state of Victoria, Australia, conditioning on differences in patient complexity across hospitals. We estimate separate models for elective and emergency patients which stay at least one night in hospitals, using fixed effects complementary log-log models to estimate AEs as a function of patient and episode characteristics, and hospital effects. We use 4 years of patient level administrative hospital data (2002/03 to 2005/06), and estimate separate models for each year. Averaged over four years, we find that adverse event rates are 12% for elective surgical inpatients, and 12.5% for emergency surgical inpatients. Most teaching hospitals have surprisingly low adverse event rates, at least after adjusting for the higher medical complexity of their patients. Some larger regional hospitals have high adverse events rates, in particular after adjusting for the below average complexity of their patients. Also, some suburban hospitals have high rates, especially the ones located in areas of low socioeconomic profile. We speculate that high rates may be due to factors beyond the control of the hospitals, such as staff shortages. We conclude that at present, care should be taken when using adverse event rates as indicators of hospital quality.

Recent developments in Dutch hospitals. How does competition impact on inpatient care?
Les nouveaux développements concernant les hôpitaux néerlandais : Dans quelle mesure la concurrence a-t-elle un impact sur les soins des patients hospitalisés ?

Meijer S., Douven R., Van Den Berg B.
La Hague : CPB : 2010/03 : 31 p.

The aim of this research was to explore the effect of the introduction of managed competition in Dutch inpatient hospital care. Firstly, we performed a literature study to determine competitive forces that have played a role in the US hospital market. Next, we discussed these forces with Dutch hospital board members to ascertain their relevance to the Dutch hospital market. The interviews revealed that Dutch insurers are cautiously initiating new initiatives such as selective contracting and united purchase combinations, and fiercely negotiate on price when buying hospital care. The board members suggested that the way to raise turnover is to increase hospital production. This resulted in growing quality competition between hospitals through the purchase of new technology and the launch of outpatient centres for specific treatments. Other forces that may have increased hospital production are the fee-for-service payment system of medical specialists and the practice of defensive medicine. As health insurers are apparently still unable to directly steer and control volume, this may result in more treatments by hospitals.

Health inequalities

Education, Knowledge and the Evolution of Disparities in Health.
Education, connaissance et évolution des inégalités de santé.

Aizer A., Stroup L.
Cambridge : NBER : 2010/04 : 35 p.

We study how advances in scientific knowledge affect the evolution of disparities in health. Our focus is the 1964 Surgeon General Report on Smoking and Health – the first widely publicized report of the negative effects of smoking on health. Using an historical dataset that includes the smoking habits of pregnant women 1959-1966, we find that immediately after the 1964 Report, more educated mothers immediately reduced their smoking as measured by both self-reports and serum cotinine levels, while the less educated did not, and that the relative health of their newborns likewise increased. We also find strong peer effects in the response to information: after the 1964 report, educated women surrounded by other educated women were more likely to reduce smoking relative to those surrounded by less educated women. Over time, the education gradient in both smoking and newborn health continued to increase, peaking in the 1980s and then shrinking, eventually returning to initial levels. These results can explain why in an era of great advancements in medical knowledge, health disparities may actually increase, at least initially.

Interrelations between Education, Health, Income and Economic Development in Europe with Emphasis on New Members of European Union.
Corrélation entre éducation, état de santé, revenu et développement économique en Europe avec un accent mis sur les nouveaux pays membres de l'Union Européenne.

Boboc C., Driouchi A.
Munich : MRPA : 2010/01 : 16 p.

This study looks at how health, education, and economic development are inter-related in the case of Europe. Factorial analyses besides econometric models, implemented on a panel data from EUROSTAT show that the included variables are interrelated. The new members of the European Union are found to be investing in education, research and development and health care. Furthermore, they have high economic growth and high improvements in education and health state indicators. However, the instability and economic risks that have appeared during the transition process do affect the level of social protection. The existing social protection system increases poverty rates and slows the convergence towards developed economies. Two main directions for enhancing human development in EU new member economies are identified. They include the strengthening of the social protection system to target the vulnerable members affected by the transition process besides increasing expenditure on research and development.


Are Physicians' Prescribing Decisions Sensitive to Drug Prices? Evidence from a Free-Antibiotics Program.
Les médecins prescripteurs sont-ils sensibles aux prix des médicaments. Résultats issus d'un programme proposant des médicaments antibiotiques gratuits.

Li S., Laxminarayan R.
Rochester : Social Science Electronic Publishing : 2010/05 : 40 p.

This paper investigates whether patient-level factors, in particular cost considerations, affect physicians' prescribing decisions. In the context of a natural experiment, we examine the effect of the first U.S. commercial free-antibiotics program on retail antibiotic sales using the difference-in-differences method. We find an overall increase in antibiotic prescriptions under the program as well as substitutions to covered antibiotics from not-covered antibiotics. The shift away from not-covered antibiotics, particularly from those that do not have covered equivalents indicates a change in physicians' prescribing decisions. We locate stronger program effects in low-income areas. Our findings are robust to a variety of specifications.

Physician dispensing and antibiotic prescriptions.
Pratiques de dispensation et utilisation des antibiotiques.

Filippini M., Masiero G., Moschetti K.
Lugano : Università della Svizzera italiana. Facoltà di scienze economiche. : 2009/11 : 25 p.

The regulation on prescribing and dispensing of antibiotics has a double purpose: to enhance access to antibiotic treatment and to reduce the inappropriate use of drugs. Nevertheless, incentives to dispensing physicians may lead to inefficiencies. We sketch a theoretical model of the market for antibiotic treatment and empirically investigate the impact of self-dispensing on the per capita outpatient antibiotic consumption using data from small geographic areas in Switzerland. We find evidence that a greater proportion of dispensing practices is associated with higher levels of antibiotic use. This suggests that health authorities have a margin to adjust economic incentives on dispensing practices in order to reduce antibiotic misuse.

Does Cost Sharing Really Reduce Inappropriate Prescriptions?
Le partage des coûts réduit-il les prescriptions inappropriées ?

Costa-I-Font J., Gemmill-Toyama M.
Rochester : Social Science Electronic Publishing : 2010/03 : 41 p.

This paper explores different empirical strategies to examine the effect of cost sharing for prescription drugs in some dimensions of medication-related quality, namely the probability of inappropriate prescription drug use among United States seniors. Using data from 1996 to 2005, we explore various specifications that correct for sample selection, endogeneity¸ and unobserved heterogeneity. We find a small, but measurable, negative price elasticity for inappropriate drug use with respect to self-reported average out-of-pocket costs for all drugs consumed. That is, user fees reduce the use of potentially inappropriate medications, however the elasticity of cost sharing is lower than that of drugs in general and the price elasticity is relatively close to zero, suggesting that any quality improvements from co-payments are small.

The Impact of Direct-to-Consumer Advertising on Pharmaceutical Prices and Demand.
L'impact de la publicité directe au consommateur sur les prix et la demande de médicaments.

Dave D., Saffer H.
Cambridge : NBER : 2010/05 : 44 p.

Expenditures on prescription drugs are one of the fastest growing components of national health care spending, rising by almost three-fold between 1995 and 2007. Coinciding with this growth in prescription drug expenditures has been a rapid rise in direct-to-consumer advertising (DTCA), made feasible by the Food and Drug Administration's (FDA) clarification and relaxation of the rules governing broadcast advertising in 1997 and 1999. This study investigates the separate effects of broadcast and non-broadcast DTCA on price and demand, utilizing an extended time series of monthly records for all advertised and non-advertised drugs in four major therapeutic classes spanning 1994-2005, a period which enveloped the shifts in FDA guidelines and the large expansions in DTCA. Controlling for promotion aimed at physicians, results from fixed effects models suggest that broadcast DTCA positively impacts own-sales and price, with an estimated elasticity of 0.10 and 0.04 respectively. Relative to broadcast DTCA, non-broadcast DTCA has a smaller impact on sales (elasticity of 0.05) and price (elasticity of 0.02). Simulations suggest that the expansion in broadcast DTCA may be responsible for about 19 percent of the overall growth in prescription drug expenditures over the sample period, with over two-thirds of this impact being driven by an increase in demand as a result of the DTCA expansion and the remainder due to higher prices.

Characterizing Markets for Biopharmaceutical Innovations: Do Biologics Differ from Small Molecules?
Caractériser les marchés pour les innovations biopharmaceutiques : les médicaments biotechnologiques diffèrent-t'ils des petites molécules ?

Trusheim M., Aitken M.L., Berndt E.R.
Cambridge : NBER : 2010/05 : 44 p.

Much has been written about the seemingly less formal, more agile biotechnology industry and its extensive interactions with academia and startups, as well as its distinct scientific, manufacturing and regulatory profile. Employing a data base encompassing all 96 biologics and 212 small molecules newly launched in the U.S. between 1998Q1 and 2008Q4, we compare their downstream clinical and commercial characteristics -- therapeutic class concentration, launch delays following approval, Orphan Drug and priority review status, supplemental indications, black box warning and safety record, and pricing and revenue growth during the product life cycle. We conclude that the market dynamics of biologics differ substantially from those of small molecules, although therapeutic class composition plays a major role.

Health policy

Health Systems Institutional Characteristics: A Survey of 29 OECD Countries.
Caractéristiques institutionnelles des systèmes de santé : une enquête auprès de 29 pays de l'OCDE.

Paris V., Devaux M., Wei L.
Paris : OCDE : 2010/04 : 136 p.

En 2008, l'OCDE a lancé une enquête auprès de ses pays membres pour recueillir une information sur les caractéristiques des systèmes de santé. Ce document présente l'information fournie par 29 pays en 2009. Il décrit comment chaque pays organise la couverture de la population contre les risques liés à la santé et le financement des dépenses de santé. Il dépeint l'organisation des soins, à travers le caractère public/privé de l'offre de soins, les modes de paiement des prestataires, le choix de l'usager et la concurrence entre prestataires, ainsi que la régulation de l'offre et des prix. Finalement, il donne une information sur la gouvernance et l'allocation des ressources dans les systèmes de santé (décentralisation, nature de la contrainte budgétaire et établissement des priorités).

Appropriate perspectives for health care decisions.
Perspectives adaptées aux décisions concernant les soins de santé.

Claxton K., Walker S., Palmer S., Sculpher M.
York : University of York : 2010/01 : 74 p.

NICE uses cost-effectiveness analysis to compare the health benefits expected to be gained by using a technology with the health that is likely to be forgone due to additional costs falling on the health care budget and displacing other activities that improve health. This approach to informing decisions will be appropriate if the social objective is to improve health, the measure of health is adequate and the budget for health care can reasonably be regarded as fixed. If NICE were to recommend a broader =societal perspective‘, wider effects impacting on other areas of the public sector and the wider economy would be formally incorporated into analyses and decisions. The problem for policy is that, in the face of budgets legitimately set by government, it is not clear how or whether a societal perspective can be implemented, particularly if transfers between sectors are not possible. It poses the question of how the trade-offs between health, consumption and other social arguments, as well as the valuation of market and non market activities, ought to be undertaken.

Primary health care

Enhanced Fee-for-Service Model and Access to Physician Services: Evidence from Family Health Groups in Ontario.
Amélioration du modèle de paiement à l'acte et accès aux services des médecins : données provenant des Family Health group en Ontario.

Kantarevic J., Kralj B., Weinkauf D.
Bonn : IZA : 2010/04 : 50 p.

We study an enhanced fee-for-service model for primary care physicians in the Family Health Groups (FHG) in Ontario, Canada. In contrast to the traditional fee-for-service (FFS) model, the FHG model includes targeted fee increases, extended hours, performance-based initiatives, and patient enrolment. Using a long panel of claims data, we find that the FHG model significantly increases physician productivity relative to the FFS model, as measured by the number of services, patient visits, and distinct patients seen. We also find that the FHG physicians have lower referral rates and treat slightly more complex patients than the comparable FFS physicians. These results suggest that the FHG model offers a promising alternative to the FFS model for improving access to physician services.

Health and Work

Health at Work and Low-pay: a European Perspective.
Santé au travail et bas salaire : une perspective européenne.

Cottini E., Lucifora C.
Milan : Universita Catolica del Sacro Cuore : 2009/12 : 25 p.

This study investigates the relationship between health, working conditions and pay in Europe. In particular, we measure health at work using self-assessed indicators for overall, as well as physical and mental health, using the 2005 wave of the EWCS (European Working Conditions Survey) for 15 EU countries. We find that, controlling for personal characteristics, (adverse) working conditions are associated with poor health status – both physical and mental. Low pay plays a role, mainly for men and when interacted with working conditions, suggesting that stigma and deprivation effects may be correlated with health at work. We also account for the potential endogeneity arising from workers sorting by firms and job types with different working conditions, and provide evidence of a causal effect of (adverse) working conditions and (low) pay on health at the workplace.

Disability in the Welfare State: An Unemployment Problem in Disguise?
L'incapacité dans les Etats Providence ne cache t'-elle pas un problème de chômage ?

Bratsberg B., Fevang E., Roed K.
Bonn : IZA : 2010/04 : 47 p.

Economies with low unemployment often have high disability rates. In Norway, the permanent disability insurance rolls outnumber registered unemployment by four to one. Based on administrative register data matched with firms' financial statements and closure data collected from bankruptcy proceedings, we show that a large fraction of Norwegian disability insurance claims can be directly attributed to job displacement and other adverse shocks to employment opportunities. For men, we estimate that job loss more than doubles the risk of entry to permanent disability and that displacements account for fully 28 percent of all new disability insurance claims. We conclude that unemployment and disability insurance are close substitutes.

The Effect of State Workers' Compensation Program Changes on the Use of Federal Social Security Disability Insurance.
L'effet des modifications du programme national de compensation des accidents du travail sur l'utilisation de l'assurance invalidité au niveau fédéral.

McInerney M.P., Simon K.I.
Cambridge : NBER : 2010/04 : 51 p.

In addition to traditional forms of private and public medical insurance, two other large programs help pay for costs associated with ill health. In 2007, Workers Compensation (WC) insurance provided $55.4 billion in medical care and cash benefits to employees who are injured at work or contract a work-related illness, and Social Security Disability Insurance (DI) provided $99 billion to individuals who suffer from permanent disabilities and are unable to engage in substantial gainful activity. During the 1990s, real DI outlays increased nearly 70 percent, whereas real WC cash benefit spending fell by 12 percent. There has been concern that part of this relationship between two of the nation's largest social insurance programs may be due to individuals substituting towards DI as state WC policies tightened. We test this hypothesis using a number of different WC and DI program parameters. We first show that this negative correlation between the national series does not hold over time within states, the level at which a causal relationship should operate. We then test how regulatory changes in state WC program parameters impact WC outcomes (intended effect) and DI outcomes (unintended effect). We find no compelling evidence of WC tightening causing DI rolls to increase, and conclude it is unlikely that state WC changes were a meaningful factor in explaining the rise in DI.

Mandatory Sick Pay Provision: A Labor Market Experiment.
Le dispositif de prise en charge obligatoire tdes indemnités journalières : une expérience sur le marché du travail.

Bauernschuster S., Duersch P., Oechssler J., Vadovic R.
Mannheim : University of Mannheim : 2010/03 : 24 p.

Sick-pay is a common provision in labor contracts. It insures workers against a sudden loss of income due to unexpected absences and helps them smooth consumption. Therefore, many governments find sick-pay socially desirable and choose to mandate its provision. But sick-pay is not without its problems. Not only it suffers from moral hazard but more importantly it is subject to a potentially serious adverse selection problem (higher sick-pay attracts sicker workers). In this paper we report results of an experiment which inquires to the extend and the severity of the adverse selection when sick-pay is voluntary versus when it is mandatory. Theoretically, mandating sick-pay may be effective in diminishing adverse selection. However, our data provide clean evidence that counteracting effects are more salient. Mandatory sick pay exacerbates moral hazard problems by changing fairness perceptions and, as a consequence, increases sick pay provision far above the mandatory levels.