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Black patients with certain chronic diseases have better outcomes if they receive medical care at facilities with a high number of Black physicians, show Michael D. Frakes of Duke University and Jonathan Gruber of MIT. The authors use a decade of medical records from the U.S. Military Health System, which provide information on the race of both patients and providers. Military-affiliated patients frequently move for reasons unrelated to their health or race, providing an ideal natural experiment for studying how Black patients’ outcomes are affected by the racial composition of a facility’s physicians. The authors studied patients with four “chronic, deadly, but ultimately manageable diseases”—diabetes, high blood pressure, high cholesterol, and clogged arteries—where the quality of patient-provider relationships is a key part of disease management. Black patients who moved to a medical facility with a one standard deviation increase in the share of Black providers had a 15% relative decline in mortality compared to non-Black patients. Increased preventive medication use accounts for between 55% and 69% of the mortality reduction; a sign, the authors say, of greater trust in provider-patient relationships.
Amanda Agan of Rutgers and co-authors find that being charged with a crime permanently changes workers’ earnings and tax filing behavior. Using IRS tax return data and court records from three states and two large counties between 2000 and 2019, the authors document that individuals who have interactions with the criminal justice system have low tax filing rates and earnings even before their first criminal charge. But individuals’ earnings and rates of tax filing fall persistently after charges are filed, even if they are charged with misdemeanors or are not convicted of any crime. Further, they find that removing non-convictions from criminal records increases earnings only for gig work—that is, it has no positive effect on employer-reported earnings or 1040 tax filing rates. The authors hypothesize that the initial effects of a criminal charge, such as loss of work experience, “lead to longer term labor-market scarring that can be difficult to undo,” thus making “clean slate” laws that hide criminal history less effective than expected.
The $4-trillion municipal bond market is marked by complex bonds that offer issuers flexibility but lower market liquidity, often increasing the borrowing costs of issuing governments. With data from 2010 to 2013 on municipal securities, economic conditions, and state-level lobbying laws, Giulia Brancaccio of New York University and Karam Kang of Carnegie Mellon University examine the trade-off between liquidity and complexity. They find that underwriters benefit from issuing more complex bonds: Moving from the average to the 75th percentile in bond complexity increases the intermediation spread—the difference between what underwriters pay an issuer and what they get for selling a bond—by 14% (17 basis points) and the underwriter’s market share by 11%. Anti-revolving-door laws reduce bond complexity by 6%, they find, suggesting that underwriters use implicit or explicit promises of employment to encourage government officials to favor these complex instruments. Although the increased underwriter rents from more complex bonds raise borrowing costs, some degree of non-standard bond provisions is nonetheless beneficial because they allow issuers more flexibility to deal with contingencies and reduce default risk.
Data from the Census Bureau and the Department of Housing and Urban Development via FRED
“We must vigorously protect global economic integration. As we do so, we need secure trade that reaps the benefits of economic integration while providing greater reliability of supply for the goods we depend on. Three key risks are of particular concern,” writes Janet Yellen, Secretary of the Treasury.
“The first risk is over-concentration…We must avoid over-concentration of the production of critical goods in any particular market…Take the example of semiconductors. Microchips are essential building blocks of the modern economy. Yet virtually all manufacturing of the most advanced chips is located in East Asia…Second, we must protect against geopolitical and security risks. Not only is Russia waging a brutal war against the Ukrainian people; it has also weaponized commodity exports against the world. … Third, we must shift away from supply chains that violate core human rights. For decades, the U.S. has prohibited the import of goods made with forced labor. One area of particular concern are imports from the Xinjiang region in China, where the Chinese government has perpetrated [human rights] abuses against Uyghurs and other ethnic and religious minority groups.”
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