SEDAP: Research Paper Abstracts (2004)

  1. The Politics of Protest Avoidance: Policy Windows, Labor Mobilization, and Pension Reform in France
    Daniel Béland and Patrik Marier

  2. According to Paul Pierson and R. Kent Weaver, the "new politics of the welfare state" is about escaping the popular blame generated by cutbacks affecting a significant portion of the population. Although the concept of blame avoidance helps to explain the political logic of welfare state retrenchment, one can argue that a careful analysis of social policy reform should take into account a largely understudied phenomenon: protest avoidance. Especially present in countries with single party governments and politically active labor unions, protest avoidance is analytically distinct from blame avoidance because it occurs when policy-makers, facing direct and nearly inescapable blame, attempt to reduce the scope of social mobilization triggered by unpopular reforms.

    In recent decades, successive French governments have successfully introduced major--and unpopular--reforms in the field of pensions, despite the difficulties to frame blame avoidance strategies in the context of France's strong concentration of state power. Focusing on the 1993, 1995, and 2003 pension reform episodes, this paper seeks to demonstrate that right wing governments have generally tried to avoid protest rather than escape blame. We claim that the key element has been avoiding disruptive strike activities by the labor movement, which are highly political in France. We argue that right wing governments have attempted to divide the fragmented labor movement and overload the reform agenda while enacting its most controversial reforms during the summer holiday season. Protest avoidance thus represents a key political variable worthy of study in the literature on welfare state retrenchment. In the future, the concept of protest avoidance could be applied to other countries and policy areas in which elected officials attempt to impose unpopular reforms that trigger social mobilization.

  3. The Impact of Differential Cost Sharing of Non-Steroidal Anti-Inflammatory Agents on the Use and Costs of Analgesic Drugs
    Paul V. Grootendorst, John K. Marshall, Anne M. Holbrook, Lisa R. Dolovich, Bernie J. O'Brien, Adrian R. Levy

  4. OBJECTIVE: To estimate the effect of differential cost sharing (DCS) schemes for non-steroidal anti-inflammatory drugs (NSAIDs) on drug subsidy program and beneficiary expenditures.

    DATA SOURCES/STUDY SETTING: Monthly aggregate claims data from Pharmacare, the public drug subsidy program for seniors in British Columbia, Canada over the period 1989-11 to 2001-06.

    STUDY DESIGN: DCS limits insurance reimbursement of a group of therapeutically similar drugs to the cost of the lowest priced drugs, with beneficiaries responsible for costs above the reimbursement limit. Pharmacare introduced two different forms of DCS, generic substitution (GS) and reference pricing (RP), in April 1994 and November 1995, respectively, to the NSAIDs. Under GS, generic and brand versions of the same NSAID are considered interchangeable, whereas under RP different NSAIDs are. We extrapolated average reimbursement per day of NSAID therapy over the months before GS and RP to estimate what expenditures would have been without the policies. These counterfactual predictions were compared to actual values to estimate the impact of the policies; the estimated impacts on reimbursement rates were multiplied by the post-policy volume of NSAIDS dispensed, which appeared unaffected by the policies, to estimate expenditure changes.

    DATA COLLECTION: The cleaned NSAID claims data, obtained from Pharmacare’s databases, were aggregated by month and by their reimbursement status under the GS and RP policies.

    PRINCIPAL FINDINGS: After RP, program expenditures declined by $22.7 million, or $4 million annually, cutting expenditure by half. Most savings accrued from the substitution of low cost NSAIDs for more costly alternatives. About 20% of savings represented expenditures by seniors who elected to pay for partially-reimbursed drugs. GS produced one quarter the savings of RP.

    CONCLUSIONS: RP of NSAIDs achieved its goal of reducing drug expenditures and was more effective than GS. The effects of RP on patient health and associated health care costs remain to be investigated.

  5. The Wealth of Mexican Americans
    Deborah A. Cobb-Clark and Vincent Hildebrand

  6. This paper analyzes the sources of disparities in the relative wealth position of Mexican Americans. Results reveal that wealth gaps are in large part not the result of differences in conditional expected wealth functions. Similarly, income differentials are important, but do not play the primary role in explaining the gap in median net worth. As much or more of Mexican Americans' wealth disadvantage is attributable to the fact that these families have more young children and heads who are younger. Furthermore, Mexican Americans' low educational attainment has a direct effect in producing a wealth gap relative to other ethnic groups (even after differences in income are taken into account) though education does not significantly affect the nativity wealth gap. Finally, geographic concentration is generally unimportant, but does contribute to narrowing the wealth gap between wealthy Mexican Americans and their white and black counterparts.

  7. Precautionary Wealth and Portfolio Allocation: Evidence from Canadian Microdata
    Sule Alan

  8. This paper estimates the effect of labour income uncertainty on financial wealth and portfolio allocation using two data sources. Wealth and portfolio choice information is obtained from the master files of the new Canadian Survey of Financial Security 1999 (SFS). Labour income risk proxies are constructed for each specified industry group (consistent with the SFS classification) using the Canadian Survey of Labour and Income Dynamics (SLID) between 1996 and 2001. The empirical results suggest the presence of a strong precautionary saving motive among Canadian households. Furthermore, the level of precautionary funds seems to decline when households have relatively unrestricted access to credit markets. The demand for risky and liquid assets does not appear to be affected by labour income uncertainty even after accounting for accessibility to credit markets. However the data suggest a significant hedging motive among the self employed.

  9. Financial Planning for Later Life: Subjective Understandings of Catalysts and Constraints
    Candace L. Kemp, Carolyn J. Rosenthal and Margaret Denton

  10. This paper examines the conditions under which individuals begin or do not begin making financial plans for their later years. The data are drawn from a sample of mid- and later-life individuals (n=51) who participated in qualitative, life-history interviews. Participants identified three types of circumstances that acted as both catalysts and constraints to their planning: financial, personal and familial. Catalytic financial influences included employer programs and enrolment in retirement courses, while job loss and unforeseen expenses were viewed as constraints. Personal influences such as health and age, as well as familial transitions such as the death of a spouse, divorce, or remarriage served as both catalysts and constraints, depending on the individual. For example, divorce was viewed by some as a constraint, while others viewed it as a catalyst. Participants' locations in the social structure influenced the onset of financial preparation, however, subjective perceptions of life circumstances were also pivotal.

  11. The Effect of Health Changes and Long-term Health on the Work Activity of Older Canadians
    Doreen Wing Han Au, Thomas F. Crossley, Martin Schellhorn

  12. Using longitudinal data from the Canadian National Population Health Survey (NPHS), we study the relationship between health and employment among older Canadians. We focus on two issues: (1) the possible endogeneity of self- reported health, particularly "justification bias", and (2) the relative importance of health changes and long-term health in the decision to work. The NPHS contains the HUI3, an "objective" health index which has been gaining popularity in empirical work. We contrast estimates of the impact of health on employment using self-assessed health, the HUI3, and a "purged" health measure similar to that employed by Bound et al. (1999) and Disney et al. (2003). A direct test suggests that self-assessed health suffers from justification bias. However, the HUI3 provides estimates that are similar to the "purged" health measure. We also corroborate recent U.S. and U.K. findings that changes in health are important in the work decision.

  13. Pension Reform and Financial Investment in the United States and Canada
    Daniel Béland

  14. This paper explores the meshing of pension politics and financial investment in Canada and the U.S. during the 1990s. Drawing on the institutionalist literature, the paper focuses on the relationship between ideas, finance and institutional legacies in the debate over the reform of earnings-related pension schemes (Canada/Quebec Pension Plan and Social Security). In Canada, the existence of a public investment board in the province of Quebec facilitated the advent of state financial investment as part of the 1998 reform of the Canada Pension Plan. In the U.S., policy learning -- the process by which experts and state officials evaluate the performance of previously enacted policies -- involved mainly a comparison between public and private pension benefits, as the growth of 401(k) and other savings schemes combined with exceptional stock- market performances stimulated financial optimism and legitimized what is commonly known as pension privatization (diverting contributions to individual savings accounts). As opposed to the situation prevailing in Canada, the idea of investing Social Security surpluses in equity faced overwhelming opposition in the U.S., despite the efforts of President Clinton to promote it, notably in his 1999 State of the Union address. Although pension privatization appeared as the most debated policy alternative in that country, the conjunction of divided government, the lack of trust between the President and the Republican majority in Congress, and the absence of short term "fiscal crisis," prevented the enactment of such a reform.

  15. Exploring the Returns to Scale in Food Preparation (Baking Penny Buns at Home)
    Thomas F. Crossley and Yuqian Lu

  16. We show that as household size increases, households substitute away from prepared foods and towards ingredients. They also devote more time to food preparation. These observations (1) are consistent with a simple model with home production, returns to scale in the time input to food preparation, and varieties of food that differ in the required time input; (2) support the idea that returns to scale in home production are an important source of returns to scale in consumption; and (3), mean that across household sizes, household market expenditures on food are not proportional to food consumption quantities. The latter may provide a partial explanation for a puzzle raised by Deaton and Paxson.

  17. Life-cycle Asset Accumulation and Allocation in Canada
    Kevin Milligan

  18. This paper documents the life-cycle patterns of household portfolios in Canada, and investigates several hypotheses about asset accumulation and allocation. Inferences are drawn from the 1999 Survey of Financial Security, with some comparisons to earlier wealth surveys from 1977 and 1984. I find cross-sectional evidence for asset decumulation at older ages when annuitized assets like pension wealth are included in the analysis. I also find that the portfolio share of financial assets increases sharply with age, while indicators of risk tolerance appear to decrease. This is consistent with families desiring more liquid and less risky assets as they age.

  19. Healthy Aging at Older Ages: Are Income and Education Important?
    Neil J. Buckley, Frank T. Denton, A. Leslie Robb, Byron G. Spencer

  20. Being higher on the socioeconomic scale is correlated with being in better health, but is there is a causal relationship? Using three years of longitudinal data for individuals aged 50 and older from the Canadian Survey of Labour and Income Dynamics, we study the health transitions for those who were in good health in the first year, focussing especially on income and education. The initial good health restriction removes from the sample those whose incomes may have been affected by a previous history of poor health, thus avoiding a well known problem of econometric endogeneity. We then ask, for those in good health, whether later transitions in health status are related to socioeconomic status. We find that they are -- that changes in health status over the subsequent two years are related in particular to income and education.

Return to SEDAP Home Page.
Last revised: Mar 15, 2005.