Division of Labour: May 2013 Archives
May 31, 2013
The Medicaid Magnet Hypothesis

That's part of the title of a new paper by Richard Cebula and J.R. Clark; the abstract:

This study empirically extends the Tiebout hypothesis of ‘voting with one’s feet’ in two ways. First, it provides updated estimates using net migration data for the period 2000–2008. Second, in addition to investigating variables reflecting public education outlays, property taxation and income taxation, it investigates whether migrants are attracted to states with higher Medicaid benefits per recipient. The latter hypothesis is referred to as the ‘Medicaid magnet hypothesis’. The analysis includes three economic variables, three quality of life variables and three Tiebout-type factors in addition to Medicaid benefits. Results indicate that consumer voters were attracted to states with higher per pupil public school spending, lower property and income tax rates, and that certain consumer-voters may be attracted to states that offer higher levels of Medicaid benefits.
Posted by E. Frank Stephenson at 08:33 AM

May 24, 2013
Look a Squirrel: New York Bowling Shoe Law Edition

Given all the mischief that state legislatures can engage in, the more time they spend distracted the better. Here's an example from NY:

New York State Senator Patrick Gallivan (R-59th District) New York State Assemblyman Robin Schimminger (D-140th District) are sponsoring a bill that would cover bowling shoes. The bill in the assembly is co-sponsored by Assembly members Brian Kolb, Crystal Peoples-Stokes and Jane Corwin.

It would require alley owners to post signs, warning keglers not to wear bowling shoes outside, lest they become wet and increase the likelihood that a bowler could slip and fall when they come inside.

Source. NY's legislature all has quite the reputation for corruption so maybe the honorables should worry more about their own affairs than whether people wear bowling shoes outdoors.

Posted by E. Frank Stephenson at 08:37 AM

May 22, 2013
Looks Like French-Style Happiness is Spreading to Sweden

Youths burn 100 cars in north Stockholm riots

M. Sarkozy has some free time on his hands since he's no longer in office in his home country so I wonder if he's been advising Sweden on ways to boost its happiness adjusted GDP. (Backstory on Sarkozy, car-burning, and happiness adjusted GDP.)

Posted by E. Frank Stephenson at 04:00 PM

May 21, 2013
Ten Thousand Commandments

The Competitive Enterprise Institute has a nifty website by that name for keeping up with the ever-expending regulatory state. Another 29,000+ pages of regulations so far this year ...

Posted by E. Frank Stephenson at 11:56 AM

May 20, 2013
State teacher union strength and student achievement

That's the title of a forthcoming Economics of Education Review paper by Johnathan Lott and Larry Kenny; the abstract:

A new and very small literature has provided evidence that students have lower test scores in larger school districts and in districts in which the district's teachers union has negotiated a contract that is more favorable to the district's teachers. The teachers’ unions at the state and national levels contribute a great deal of money to candidates for state and federal offices. This gives the unions some influence in passing (defeating) bills that would help (harm) the state's teachers. We introduce two novel measures of the strength of the state-wide teachers union: union dues per teacher and union expenditures per student. These reflect the key role of political influence for state-wide unions. We provide remarkably strong evidence that students in states with strong teachers unions have lower proficiency rates than students in states with weak state-wide teacher unions.
Posted by E. Frank Stephenson at 02:35 PM

On Occupational Licensing as a Barrier to Entry

Here's the abstract of a paper with interesting implications:

Entry into licensed professions requires meeting competency requirements, typically assessed through licensing examinations. This paper explores whether the number of individuals attempting to enter a profession (potential supply) affects the difficulty of the entry examination. The empirical results suggest that a larger potential supply may lead to more difficult licensing exams and lower pass rates. This implies that licensing may partially shelter the market from supply shocks and limit the impact of policies targeted at increasing labor supply.

The finding that occupational licensing exam difficulty is endogenous with respect to potential entrants into the profession is strong evidence in favor of considering licensing to be a barrier to entry rather than a quality assurance mechanism.

Posted by E. Frank Stephenson at 08:34 AM

May 16, 2013
Berry Sues Tennessee's Higher Ed Commission

I'm happy to see my employer pushing back against the Tennessee Higher Ed Commission's anti-competitive behavior; here's a synopsis:

Berry College is suing Tennessee’s higher education commission in a dispute over billboard advertising.

Berry College says in the federal lawsuit that the Tennessee agency has threatened to sue the school if it continues to advertise in that state without registering and paying fees of more than $20,000 a year.

The Rome-based school says it competes with Tennessee colleges and has advertised on at least one billboard in the state. It depicts two students in front of a college building with Berry’s name, website and the phrase “26,000 acres of opportunity.”

The Tennessee Higher Education Commission has threatened other schools with such requirements in order to reduce competition from out-of-state institutions, Berry maintains in the lawsuit. Other schools have removed their ads over the issue rather than risk civil and criminal sanctions, the school’s lawyers say.

Posted by E. Frank Stephenson at 12:35 PM

Here's A Rarely Seen Headline

Life Church will meet at Brewhouse

Posted by E. Frank Stephenson at 12:13 PM

Toilet Paper Shortage in the Bolivarian Paradise
First milk, butter, coffee and cornmeal ran short. Now Venezuela is running out of the most basic of necessities – toilet paper.

Blaming political opponents for the shortfall, as it does for other shortages, the government says it will import 50m rolls to boost supplies.

That was little comfort to consumers struggling to find toilet paper on Wednesday.

"This is the last straw," said Manuel Fagundes, a shopper hunting for tissue in Caracas. "I'm 71 years old and this is the first time I've seen this."

One supermarket visited by the Associated Press in the capital on Wednesday was out of toilet paper. Another had just received a fresh batch, and it quickly filled up with shoppers as the word spread.

"I've been looking for it for two weeks," said Cristina Ramos. "I was told that they had some here and now I'm in line."

Economists say Venezuela's shortages stem from price controls meant to make basic goods available to the poorest parts of society and the government's controls on foreign currency.

Source. I wonder if it's just a cheap stunt to get a visit from Sheryl Crow--she'd be an upgrade over Sean Penn who liked to visit his departed pal Hugo.

Posted by E. Frank Stephenson at 12:10 PM

May 15, 2013
The Greedy Hand: Florida Red Light Camera Edition

Florida quietly shortened yellow light standards & lengths, resulting in more red light camera tickets for you

One of the best things to happen under Georgia's golden dome was enacting legislation requiring that a second be added to yellow lights at red light camera intersections. When cities such as Rome then got rid of their red light cameras it was apparent that the cameras were more about revenue than safety.

Posted by E. Frank Stephenson at 09:02 AM

May 14, 2013
Iron Man? No, the Real Hero is the Super Multiplier

That's the title of a superb takedown of NC's film tax credits by Jon Sanders. The critique, though, is more general than just the film tax credit as Jon goes after a broad swath of economic impact studies based on absurdly large multipliers (one of a renewable fuel mandate claimed a multiplier of 19.3!).

Posted by E. Frank Stephenson at 02:23 PM

May 01, 2013
Did the Community Reinvestment Act (CRA) Lead to Risky Lending?
Yes, it did. We use exogenous variation in banks’ incentives to conform to the standards of the Community Reinvestment Act (CRA) around regulatory exam dates to trace out the effect of the CRA on lending activity. Our empirical strategy compares lending behavior of banks undergoing CRA exams within a given census tract in a given month to the behavior of banks operating in the same census tract-month that do not face these exams. We find that adherence to the act led to riskier lending by banks: in the six quarters surrounding the CRA exams lending is elevated on average by about 5 percent every quarter and loans in these quarters default by about 15 percent more often. These patterns are accentuated in CRA-eligible census tracts and are concentrated among large banks. The effects are strongest during the time period when the market for private securitization was booming.

That's the title and abstract of this NBER WP. Of course with pols being pols this recent headline in the WaPo should be no surprise:

Obama administration pushes banks to make home loans to people with weaker credit

Posted by E. Frank Stephenson at 12:28 PM

The statesman who should attempt to direct private people in what manner they ought to employ their capitals would not only load himself with a most unnecessary attention, but assume an authority which could safely be trusted, not only to no single person, but to no council or senate whatever, and which would nowhere be so dangerous as in the hands of a man who had folly and presumption enough to fancy himself fit to exercise it. -Adam Smith

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