Three Essays on Public Economics and Economic History

Abstract

How do government regulatory policies shape economic output and consumer welfare? What are the costs and benefits of government regulations? These two fundamental inquiries are at the core of my research. In this dissertation, I assess the consequences of government regulatory policies in the healthcare sector from the following three perspectives: (1) How do product quality and safety regulations shape the development of new (medical) technologies? (2) Can regulations targeting administrative requirements influence the accessibility and provision of medical services? (3) To what extent do historical occupational licensing regulations for the healthcare workforce affect consumer welfare?

In my job market paper “Product Safety Standards and Technological Innovation: Evidence from the 1968 Radiation Control,” I explore the effects of product safety standards on the speed and direction of medical innovation. Product safety regulation has been a widely adopted policy tool throughout history. Debates typically center around the trade-off between safeguarding consumers and stifling the development of new products. In this paper, I study how stricter safety standards influence the nature and speed of medical innovation by drawing evidence from the 1968 Radiation Control for Health and Safety Act. For the first time at the federal level, this Act mandated enforceable performance standards to control the radiation risk of electronic products. I find that in response to this act, firms developed new technologies reducing the risks of diagnostic X-ray medical equipment (an increase of 64.2% in patent count) as a key channel to lower compliance costs. I also document an increase of a similar magnitude for innovations (by 72.1%) representing new radiation-generating medical devices and show some suggestive evidence for the complementarity of risk mitigation and new technologies using radiation. I rule out a number of alternative explanations for these findings, including the introduction of the CT scan in 1972.

In the second chapter, “Cutting Red Tape: Administrative Simplification and Treatment Capacity,” I investigate the impact of regulating prior authorization on the provision of substance abuse treatment services. Excess administrative expenses impose a strain on the U.S. healthcare system. Yet, little is known regarding how these administrative requirements affect facilities' provision of medical services. I empirically assess this question by drawing on the staggered adoption of state laws restricting prior authorization (PA) requirements for substance abuse treatments (SAT) in commercial health plans. Using multiple datasets, I find specialty care facilities are more likely to provide low-intensity (i.e., outpatient) SAT services while decreasing the provision of high-intensity ones (i.e., intensive outpatient, partial hospital, inpatient). I further corroborate supporting evidence for one plausible mechanism: lowering administrative hassles can expand both facilities' and health providers' treatment capacity. To capture welfare implications, I document the fact that imposing PA restrictions can reduce the suicide rate due to SUD issues. This paper thus highlights a novel source of costs associated with healthcare administrative processes: beyond imposing direct paperwork costs, they substantially restrain organizational treatment capacity.

In the third chapter, “Veterinary Care Regulation and Livestock Production: Evidence from the Progressive Era,” I explore how regulating veterinary practice shaped a key dimension of agricultural development: livestock production. Exploiting the staggered adoption of state-level licensing laws for veterinary care in the late 19th century and the early 20th century, I document the fact that stricter licensing requirements led to a significant surge in heads of livestock (i.e., horses, mules, milch cows, and swine) per acre of farmland. I further provide some suggestive evidence for one plausible mechanism: during the Progressive Era, stricter veterinary care regulations mitigated informational asymmetries in specialized medical service, thereby altering the input choices in agricultural production. My findings thus highlight the broader effects of labor market regulation on consumer outcomes and provide important implications for ongoing debates regarding the value of occupational licensing.