Did the Hospital Readmissions Reduction Program Reduce Readmissions? An Assessment of Prior Evidence and New Estimates

In this article, we provide a comprehensive, empirical assessment of the hypothesis that the Hospital Readmissions Reduction Program (HRRP) affected hospital readmissions. In doing so, we provide evidence as to the validity of prior empirical approaches used to evaluate the HRRP and we present results from a previously unused approach to study this research question—a regression-kink design. Results of our analysis document that the empirical approaches used in most prior research assessing the efficacy of the HRRP often lack internal validity. Therefore, results from these studies may not be informative about the causal consequences of the HRRP. Results from our regression-kink analysis, which we validate, suggest that the HRRP had little effect on hospital readmissions. This finding contrasts with the results of most prior studies, which report that the HRRP significantly reduced readmissions. Our finding is consistent with conceptual considerations related to the assumptions underlying HRRP penalty: in particular, the difficulty of identifying preventable readmissions, the highly imperfect risk adjustment that affects the penalty determination, and the absence of proven tools to reduce readmissions.

Estimating the impact of the Norwegian Introduction Programme on integration using a Regression Kink Design (RKD): Pre-registration

The Introduction Programme offers language, employment and cultural training for new migrants in Norway. Attendance on the programme is mandatory for most refugees and family reunification migrants (with non-Nordic spouses). Migrants are given a special benefit for attendance (calculated by hours). The amount changes based on an age cut-off: under 25s earn benefits at 2/3 the rate of those over 25. Benefits are calculated per hour of programme attendance.The benefit age cut-off can be used to measure the effects of cash incentives on programme attendance and its knock-on effect on integration outcomes such as education and employment. We propose a Regression Kink Design (RKD) to answer our primary research questions:RQ1: What is the effect of the age-cut off (via benefit rate) on programme participation?RQ2: What is the effect of the age-cut off (via benefit rate) on integration outcomes inclusive of employment status, wages, and further education/ training?RQ3: What is the direct effect of programme participation on integration outcomes? This is estimated using the results of questions 1 and 2.RQ4: What is the variance in programme attendance effects across municipalities? This is looking at the effects identified in RQs 1 and 2 across different intervention sites.RQ5: Do heterogeneous effects exists for a) programme participation and b) integration outcome? This will involve subgroup analysis.RQ6: What are the effects of the changes in rights and obligations at age 55 on programme participation? Over 55s have the right but not the obligation to participate in the Introduction Programme.RQ6 is a scoping question; if a change in participation occurs around this age then this means that the age 55 cut-off can used for further studies (conditional on sample size).

Using Nonlinear Budget Sets to Estimate Extensive Margin Responses: Method and Evidence from the Earnings Test

We estimate the impact of the Social Security Annual Earnings Test (AET) on older workers’ employment. The AET reduces social security claimants’ current benefits in proportion to their earnings in excess of an exempt amount. Using a regression kink design and Social Security Administration data, we document that the discontinuous change in the benefit reduction rate at the exempt amount causes a corresponding change in the slope of the employment rate, suggesting that the extensive margin of labor supply is more sensitive to this policy than commonly thought. We develop a model and method that allow us to translate the behavioral responses into a lower bound estimate of 0.49 for the extensive margin elasticity, which implies more than a 1 percentage point increase in work in the absence of the AET. (JEL H55, J14, J22, J26, J31)

The Costs and Benefits of Liquidity Regulations: Lessons from an Idle Monetary Policy Tool

We investigate how liquidity regulations affect banks by examining a dormant monetary policy tool that functions as a liquidity regulation. For causal inference, we use a regression kink design that relies on the variation in a marginal high-quality liquid asset requirement around an exogenous threshold. We show that mandated increases in liquidity cause banks to reduce credit supply. Liquidity requirements also depress banks’ profitability, though some of the regulatory costs are passed on to liability holders. We document a prudential benefit of liquidity requirements by showing that banks subject to a higher requirement just before the financial crisis had lower odds of failure.

Fostering entrepreneurship: the crucial role of monitoring schemes

PurposeThe purpose of this paper is to investigate the effect of government-led programs on the engagement of individuals in entrepreneurship.Design/methodology/approachThe authors worked with government-led programs of 16 European countries between 2003 and 2014 and were able to benefit from the 2008 natural experiment (i.e. the global financial crisis) to produce a robust investigation using a regression kink design (RKD).FindingsThe work shows that government-led programs that are designed to include monitoring schemes can significantly increase individuals' engagement in opportunity-driven entrepreneurship. The authors found that monitoring schemes do not have the same relevance for necessity-driven entrepreneurship. Therefore, the authors believe the difference occurs because monitoring design avoids problems related to moral hazard and adverse selection when it comes to individuals choosing whether to participate (or not) in government-led programs.Originality/valueWhile it is important for governments to provide an enabling environment for entrepreneurship, this study showed that not all types of public program have positive results. In fact, it has been demonstrated that poorly-designed programs can actually decrease the likelihood of individuals engaging in entrepreneurial activities. The efficiency of programs is substantially improved, however, when they are designed to include monitoring schemes.

Unemployment Insurance Taxes and Labor Demand: Quasi-Experimental Evidence from Administrative Data

To finance unemployment insurance, states raise payroll tax rates on employers who engage in layoffs. Tax rates are, therefore, highest for firms after downturns, potentially hampering labor-market recovery. Using full-population, administrative records from Florida, I estimate the effect of these tax increases on firm behavior leveraging a regression kink design in the tax schedule. Tax hikes reduce hiring and employment substantially, with no effect on layoffs or wages. The results imply unanticipated costs of the financing regime which reduce the optimal benefit by a quarter and account for 12 percent of the unemployment in the wake of the Great Recession. (JEL D22, E24, H25, H32, H71, J23, J65)