The authors discuss the changing role of the antitrust policy in today’s health care markets and possible future environments. The antitrust challenges today lie in maintaining competition when hospitals merge or bargain as multi-hospital systems, providing access in areas with high concentration of hospital closures, incorporating quality into the measures of market power. The role of quality competition may become more important in the future scenarios such as single payer system under fixed prices.

The EITC is currently the largest, federal cash-transfer program for low-income families, with expenditures of almost $34 billion dollars in 2002. Advocates of the credit argue that this redistribution occurs with much less distortion to labor supply than that caused by other elements of the welfare system. Empirical evidence has established that the credit “encourages work effort” among eligible female household heads. Less recognized is the fact that these positive work incentives are unlikely to hold among married couples. Theory suggests that while primary earners (typically men) would increase labor force participation, secondary earners would reduce their labor supply in response to an EITC. We study the hours worked response of married couples to several EITC expansions between 1984 and 1996. While our primary interest is the response to changes in the budget set induced by the EITC, our identification strategy takes account of budget set changes caused by federal tax policy, as well as cross-sectional differences in non-labor income and family size. We estimate reduced-form hours of work equations using instrumental variables to account for the endogeneity of net of tax wages and virtual income. Our instruments are based on tax reforms and trace out the budget set. The results show that EITC expansions between 1984 and 1996 led to modest reductions in hours worked by married men and married women. Overall, married women in the labor force are estimated to decrease hours worked by between 1 and 4 percent. Women in the phase-out range of the credit experience the greatest reductions, between 3 and 17 percent. Overall, the evidence suggests that family labor supply and pretax earnings fell.

A joint Wharton School-World Bank conference called attention to the high proportions of medical care spending paid out of pocket in most developing countries. One of the reasons for this, attendees said, is the problem in such economies of generating high tax revenues in a nondistortive way. Since people are paying out of pocket, they should be able to afford some private insurance that can spread the risk of above-average out-of-pocket payments. The potential efficiency gains from greater use of voluntary private insurance seem large, but there are a number of possible impediments to the emergence of such insurance.

Investment in energy research and development in the U.S. is declining despite calls for an enhancement of the nation’s capacity for innovation to address environmental, geopolitical, and macroeconomic concerns. We examine investments in research and development in the energy sector, and observe broad-based declines in funding since the mid-1990s. The large reductions in investment by the private sector should be a particular area of concern for policy makers. Multiple measures of patenting activity reveal widespread declines in innovative activity that are correlated with research and development (R&D) investment—notably in the environmentally significant wind and solar areas. Trends in venture capital investment and fuel cell innovation are two promising cases that run counter to the overall trends in the sector. We draw on prior work on the optimal level of energy R&D to identify a range of values which would be adequate to address energy-related concerns. Comparing simple scenarios based on this range to past public R&D programs and industry investment data indicates that a five to ten-fold increase in energy R&D investment is both warranted and feasible.

Conditional cash transfer programs are now used extensively to encourage poor parents to increase investments in their children’s human capital. These programs can be large and expensive, motivating a quest for greater efficiency through increased impact of the programs’ imposed conditions on human capital formation. This requires designing the programs’ targeting and calibration rules specifically to achieve this result. Using data from the Progresa randomized experiment in Mexico, this article shows that large efficiency gains can be achieved by taking into account how much the probability of a child’s enrollment is affected by a conditional transfer. Rules for targeting and calibration can be made easy to implement by selecting indicators that are simple, observable, and verifiable and that cannot be manipulated by beneficiaries. The Mexico case shows that these efficiency gains can be achieved without increasing inequality among poor households.

Income shocks on poor households are known to induce parents to take their children out of school and send them to work when other risk-coping instruments are insufficient. State dependence in school attendance further implies that these responses to short-run shocks have long-term consequences on children’s human capital development. Conditional cash transfer (CCT) programs, where the condition is on school attendance, have been shown to be effective in increasing educational achievements and reducing child work. We ask the question here of whether or not children who benefit from conditional transfers are protected from the impacts of shocks on school enrollment and work. We develop a model of a household’s decision regarding child school and work under conditions of a school re-entry cost, conditional transfers, and exposure to shocks. We take model predictions to the data using a panel from Mexico’s Progresa experience with randomized treatment. Results show that there is strong state dependence in school enrollment. We find that the conditional transfers helped protect enrollment, but did not refrain parents from increasing child work in response to shocks. These results reveal that CCT programs can provide an additional benefit to recipients in acting as safety nets for the schooling of the poor.