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Microeconomic Insights

The Microeconomic Insights blog posts summaries of high quality microeconomic research to inform its audience about global microeconomic issues. Its topics cover all areas of microeconomics, including development, health economics, environmental economics and international trade.

When Fewer Options are Better for Consumers: The Benefits of Narrow Health Insurance Networks

Summary Should health insurers be required to allow their enrollees to visit any hospital or doctor?  Many insurers limit enrollees to “in-network” medical providers, forcing them to pay significant “out-of-network” costs if they seek care elsewhere. Our research examines the role that limited medical provider networks play in the U.S. commercial healthcare market and measures both their impact on...

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Providing low-cost labor market information to assist jobseekers

Summary People who are receiving unemployment benefits and looking for a job are typically required to consider occupations beyond their preferred line of work, at least after an initial period of joblessness. But how should jobseekers decide which occupations to consider, and how should employment agencies advise them? A team of economists has developed a new...

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Subsidizing health insurance for low-income adults: evidence from Massachusetts

Summary How much are low-income individuals willing to pay for health insurance? And what are the implications for insurance market reforms that propose to change government subsidies? Using administrative data from the pioneer subsidized insurance exchange in Massachusetts over the period 2009 to 2013, this study exploits discontinuities in the premium subsidy schedule to estimate willingness to pay and...

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Understanding the Average Impact of Microcredit

Summary The global microloan portfolio is now worth over 102 billion dollars and is growing yearly. This research estimates the impact of the policy and the extent to which this impact is different across different contexts. It finds that overall, the best existing evidence suggests that the average impact of these loans is small and that in the future, it may be beneficial to seek alternative approaches...

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Nominal wage rigidity in village labor markets: evidence from India

Summary Markets for daily wage labor in agriculture are ubiquitous in poor countries, providing employment for hundreds of millions of workers in India alone. In an exploration of how nominal wages in these markets respond to changing economic conditions, this research finds strong evidence of limited downward adjustment in the face of a negative shock, such as a drought....

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Market power and the Laffer curve

Summary Arthur Laffer, who was recently awarded the Presidential Medal of Freedom, is famous for sketching an inverted U-shaped diagram of the supposed trade-off between tax rates and tax revenues. The Laffer curve originates from the economist’s 1974 conversation with Wall Street Journal reporter Jude Wanniski, and politicians Dick Cheney and Donald Rumsfeld. During the meeting, Laffer is said to have...

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How management practices drive firms’ performance in the long run: evidence from the Marshall Plan

Summary Boosting firms’ long-run performance: evidence from the Marshall Plan There is a growing body of evidence from economic research of the importance of better management practices in driving improvements in firms’ performance. But since these innovations have been implemented fairly recently, it is unclear whether the effects persist over the long run. This research explores the long-run effects of...

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How management practices drive firms’ performance in the long run: evidence from the Marshall Plan

Summary Boosting firms’ long-run performance: evidence from the Marshall Plan There is a growing body of evidence from economic research of the importance of better management practices in driving improvements in firms’ performance. But since these innovations have been implemented fairly recently, it is unclear whether the effects persist over the long run. This research explores the long-run effects of...

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The value of international business relationships: insights from Kenya’s rose exporters

Summary The challenge of enforcing contractual agreements is a pervasive feature of commercial transactions, particularly in developing countries and in transactions that cross borders. Firms thus rely on informal mechanisms – such as repeated relationships – to guarantee compliance. Despite a vast body of theoretical work on this subject, relatively little is known about how business relationships work...

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The value of international business relationships: insights from Kenya’s rose exporters

Summary The challenge of enforcing contractual agreements is a pervasive feature of commercial transactions, particularly in developing countries and in transactions that cross borders. Firms thus rely on informal mechanisms – such as repeated relationships – to guarantee compliance. Despite a vast body of theoretical work on this subject, relatively little is known about how business relationships work...

Read More »