A Free Market for Medical Care? It’s Been Tried

Alternative medical practitioners and Jacksonian populists found common cause in an open market for medicine, write Jacob Habinek and Heather A. Haveman

Selective Employment Subsidies: Can Okun’s Law Be Repealed?

[Excerpt] Concern that structural factors impede efficient labor market performance is evidenced in both statistical analyses of economic potential and policy proposals for selective employment subsidies. Estimates of the level and expected growth of full-employment GNP have recently been revised downward, as has the 3.2 unemployment multiplier implicit in Okun\u27s Law (see U.S. Council of Economic Advisers and George Perry). These indications of structural changes in labor markets reinforce statistics showing excessively high unemployment rates for youths and blacks, and labor force participation rates that are increasing for women and decreasing for men. The simultaneous concern with high inflation and high measured unemployment, in the context of major changes in labor force composition and increased variance in sectoral unemployment rates (see Perry), has brought forth numerous and sizable selective employment subsidy policies (SESP) in both the United States and Western Europe. The SESP, changes in potential GNP, and Okun\u27s Law are not unrelated phenomena. This paper explores that relationship. Section I presents a brief taxonomy of the primary SESPs which are currently being discussed in Western industrialized countries. Section II provides the economic rationale underlying these measures. Section III explores the relationship of SESP to the prospective growth of aggregate output, in the context of Okun\u27s Law. Evidence on the existence and magnitude of changes in employment decisions in response to the New Jobs Tax Credit (NJTC) is presented in Section IV

The Clinton welfare reform plan: Will it end poverty as we know it

The central elements in President Clinton's proposal to reform the welfare system are: increasing the earned income tax credit, improving the child support system, educating and training the poor, and limiting the amount of time people can receive assistance. The authors commend the first two components of the president's plan but question the likely effectiveness of the last two: even with the education, training, and child care programs that the president has proposed, few welfare recipients will be able to command wages that would lift them out of poverty, and successful education and training programs would cost more than the government appears willing to spend. They recommend that the president consider giving tax credits to, and subsidizing the wages paid by, employers who hire low-wage workers and assist young people and poor families to save for future opportunities. In their view, poverty will not be alleviated by only getting tough on welfare recipients; instead, labor market interventions should be adopted so as to expand opportunities for low-wage, low-skilled workers.

Does the Targeted Jobs Tax Credit Create Jobs at Subsidized Firms?

This paper uses the results of a survey of more than 3,500 private employers to determine whether use of the Targeted Jobs Tax Credit (TJTC) alters the level of a firm\u27s employment and/or whom the firm hires. We estimate that each subsidized hire generates between .13 and .3 new jobs at a participating firm. Use of the program also appears to induce employers to hire more young workers (age 25 and under). Our results suggest, however, that at least 70 percent of the tax credits granted employers are payments for workers who would have been hired even without the subsidy. Such payments represent mere transfers to employers