Smoking: taxing health and Social Security

Cigarette smoking is costly in terms of not only its effects on smokers' health but also the direct and indirect financial costs it imposes on smokers and their families. For instance, premature death caused by smoking may redistribute Social Security income in unexpected ways that affect behavior and reduce the economic well-being of smokers and their dependents. ; This article examines the effects of smoking-attributable mortality on the net marginal Social Security tax rate (NMSSTR)—the difference between the statutory payroll tax rate and the present value of future benefits to which a covered worker is entitled. ; The analysis shows that smokers, as a result of shorter life expectancies, incur a higher NMSSTR than nonsmokers. This higher tax rate could have implications for both labor supply behavior and the Social Security System's funding. ; The authors note that smoking status should be considered in assessing Social Security legislative proposals designed to reduce system inequities or promote social adequacy—in particular, amendments designed to reduce poverty among young widows and widowers. Failure to take smoking status into account may unintentionally promote behavior that is detrimental to health.Social security

Smoking: taxing health and Social Security

While the health risks associated with smoking are well known, the impact on income distributions is not. This paper extends the literature by examining the distributional effects of a behavioral choice, in this case smoking, on net marginal Social Security tax rates (NMSSTR). The results show that smokers, as a result of shorter life expectancies, incur a higher NMSSTR than nonsmokers. In addition, as low-earnings workers have a higher smoking prevalence than high-earnings workers, smoking works to widen the income distribution. This higher tax rate could have implications for both labor supply behavior and Social Security system funding.

Does disability explain state-level differences in the quality of Medicare beneficiary hospital inpatient care?

Almost 20 percent of the total U.S. population and 42 percent of the population over the age of sixty-six are disabled. Research has shown that the presence of a disability can crowd out treatment for medical conditions not necessarily related to the disability and that states that are disproportionately African-American have a lower quality of hospital care. This paper uses quality of care data from the Centers for Medicare and Medicaid Services (CMS) to determine whether disability also explains state-level differences in quality of hospital care. The quality of Medicare beneficiary hospital care was measured using process measures for several medical conditions, including acute myocardial infarction, heart failure, stroke, and pneumonia, that are the leading causes of mortality. We use nonlinear least squares to assess the association between Medicare beneficiary quality of care and state- and medical system–level characteristics. The result for the key variable of interest—disability—reveals that a 1 percent increase in a state's disability rate leads to a 1 percentage point reduction in the score of the state's quality of hospital care. Without explicitly incorporating strategies to eliminate disparities in care incurred by people with disabilities, CMS may not adequately promote the goal of delivering the highest quality of care to all Medicare beneficiaries.

The quality of preventive and diagnostic medical care: why do southern states underperform?

As the cost of health care increases rapidly, the health care industry has turned its attention to methods of cost containment. However, concern exists that the drive to contain costs could lead to compromises in the quality of medical care. One practice that may slow the growth rate of health care expenditures and improve morbidity and mortality rates is the widespread use of preventive and diagnostic services. ; Using data compiled by the Centers for Medicare and Medicaid Services, this article evaluates the quality of care received by Medicare beneficiaries in each state. The authors examine states’ use of preventive services (influenza and pneumococcal immunizations) and diagnostic services (mammograms and diabetes screening tests) among Medicare beneficiaries. ; The analysis points out regional differences in preventive and diagnostic care across the United States. The West has higher levels of preventive care while the Northeast has higher scores for diagnostic care. But the South had the lowest average score for quality of care in both categories. The authors attribute differences among states’ levels of preventive and diagnostic care to their socioeconomic and demographic characteristics, noting in particular that the percentage of a state’s Medicare population that is black is inversely related to the quality of medical care. ; A better understanding of the causes behind racial disparities in the quality of medical care, the authors conclude, will promote the delivery of the highest quality of care to all Medicare beneficiaries and slow the growth rate of health care costs.

The role of labor market intermittency in explaining gender wage differentials

Using the Health and Retirement Survey and standard wage decomposition techniques, this paper finds that the difference in intermittent labor force participation between men and women accounts for 47 percent of the contribution to the wage gap of differences in observed characteristics. Not controlling for intermittent behavior results in too much importance being placed on gender differences in job characteristics.

Female labor force intermittency and current earnings: a switching regression model with unknown sample selection

Using the Health and Retirement Survey, this paper finds a 16 percent selectivity-corrected wage penalty among women who engage in intermittent labor market activity. This penalty is experienced at a low level of intermittent activity but appears not to play an important role in a woman’s decision to undertake such activity. In addition, employer preferences appear to play a larger role than human capital atrophy in the determination of the wage penalty.

Why choose women's work if it pays less? A structural model of occupational choice

This paper controls for the selection bias associated with occupational choice and the labor force participation decision in estimating the wage penalty for working in female-dominated occupations. Using data from the May 1979 and the April 1993 supplements to the Current Population Survey, the author finds that women working in female-dominated occupations have similar or higher expected wages in their chosen occupation compared to nonfemale-dominated occupations. This result indicates that there is efficient matching between occupations and skills for women in the labor force and refutes the theories of occupational segregation or crowding as determinants of the gender wage differential.Employment (Economic theory) ; Wages ; Labor supply

It's who you are and what you do: explaining the IT industry wage premium

The information technology (IT) boom dramatically boosted the rapid growth of the U.S. economy during the 1990s, contributing 1.4 percentage points of the 4.6 percent national average real gross domestic product growth from 1996 to 2000. As the IT boom went bust in 2001, however, the IT sector’s influence on the economy dwindled. ; But a lingering effect of the IT boom may still be apparent in the wages of IT workers. This article explores the extent to which variations in wages between IT-producing and non-IT industries can be accounted for by differences in wages paid to IT-related occupations. ; Using data for 1996 to 2002 from the Current Population Survey’s Earner Study, the authors study a sample of more than 845,000 U.S. workers aged eighteen to sixty-four. The sample is categorized according to individuals’ primary job and is divided into nine industry groups—three IT-related and six non-IT-related. ; The analysis shows that the average wage of IT occupations is greater than for non-IT occupations irrespective of industry. Individual worker characteristics such as years of education may account for some of this wage differential. But even after such characteristics and occupational differences are controlled for, workers in IT-producing industries still enjoy a wage premium over workers in other sectors.

Assessing the impact of education and marriage on labor market exit decisions of women

During the late 1990s, the convergence of women's labor force participation rates to men's rates came to a halt. This paper explores the degree to which the role of education and marriage in women's labor supply decisions also changed over this time period. Specifically, this paper investigates women's decisions to exit the labor market upon the birth of a child. The results indicate that changing exit behavior among married, educated women at this period in their lives was not likely the driving force behind the aggregate changes seen in labor force participation. Rather, changes in exit rates among single women, particularly those less educated, are much more consistent with the changing pattern of aggregate female labor force participation.

Earnings on the information technology roller coaster: insight from matched employer-employee data

This paper uses matched employer-employee data for the state of Georgia to examine workers’ earnings experience through the information technology (IT) sector’s employment boom of the mid-1990s and its bust in the early 2000s. The results show that even after controlling for individual characteristics before the sector’s boom, transitioning out of the IT sector to a non-IT industry generally resulted in a large wage penalty. However, IT service workers who transitioned to a non-IT industry still fared better than those who took a non-IT employment path. For IT manufacturing workers, there is no benefit to having worked in tech, likely because of the nontransferability of manufacturing experience to other industries.