Associate Professor of Economics

Dr. Aaron Yelowitz is an Associate Professor in the Department of Economics at University of Kentucky. He also is a joint faculty member in the Martin School of Public Policy and Administration at University of Kentucky, an adjunct scholar with the Cato Institute, and the associate director of the John H. Schnatter Institute for the Study of Free Enterprise. He serves on the editorial board for Journal of Labor Research.

Dr. Yelowitz received his Ph.D. from MIT in 1994, and has previously worked at UCLA as an assistant professor. He has published articles in the Journal of Political Economy, Quarterly Journal of Economics, Journal of Health Economics, Journal of Public Economics, Journal of Human Resources, Economic Inquiry, Southern Economic Journal, Real Estate Economics, Cityscape, Economics Letters, Applied Economics Letters, Economic Development Quarterly, Health Services Research, Health Economics, Empirical Economics, and Pediatric Neurology. He has taught graduate classes on public economics and health economics, and undergraduate classes on labor economics, public economics, housing economics and poverty and welfare programs.

Here's how to contact me:

studies
Peer Reviewed Studies
Marton, Yelowitz, Talbert. JHE 2014. A Tale of Two Cities? The Heterogenous Impact of Medicaid Managed Care

We examine how variation in reimbursement incentives and administration among two Medicaid managed care plans impacts utilization and spending. We find large differences in the relative success of each plan in reducing utilization and spending that are likely driven by important differences in plan design.

Medicaid, Managed Care, Child Health
Harris, Yelowitz. Economics Letters 2014. Is There Adverse Selection in the Life Insurance Market? Evidence from a Representative Sample of Purchasers

This paper examines asymmetric information in the life insurance market using data that link life insurance holdings with death records for a representative sample of purchasers. This analysis finds no compelling evidence for adverse selection in a broad age cohort.

Adverse Selection, Advantageous Selection, Life Insurance
Yelowitz, Scott, Beck. Cityscape 2013. The Market for Real Estate Brokerage Services in Low- and High-Income Neighborhoods: A Six-City Study

We examine whether low-income neighborhoods are as well served by real estate professionals as higher income neighborhoods. We find no evidence that access is worse in disadvantaged areas.

Redlining, Hefindahl-Hirschman Index
Beck, Scott, Yelowitz. Real Estate Economics 2012. Concentration and Market Structure in Local Real Estate Markets

We systematically analyze market concentration across 90 real estate markets. In medium and large markets, no evidence exists that market concentration might create problems for competition.

Hefindahl-Hirschman Index, real estate, competitiveness
Scott, Yelowitz. Economic Inquiry 2010. Pricing Anomalies in the Market for Diamonds: Evidence of Conformist Behavior

We find that people are willing to pay a premium upward of 18% for a diamond that is one-half carat rather than slightly less than a half carat and 5%-10% for a one-carat rather than a slightly less than one-carat stone.

Diamonds, Pricing Anomalies, Behavioral Economics
Toikka, Yelowitz, Neveu. Economic Development Quarterly 2005. The Poverty Trap and Living Wage Laws

We examine the effects of living wage laws in cities where such laws have been enacted or considered. The living wage appears to be badly targeted and ineffective at raising comprehensive disposable income.

Living wages, minimum wages
Baumann, Ryan, Yelowitz. Pediatric Neurology 2004. Physician Preference For Antiepileptic Drug Concentration Testing

A four-item questionnaire asked active US members of the Child Neurology Society to value painless anti-epileptic drug concentration monitoring, whether members had ordered a saliva level in the last year, and whether such levels were available.

Painless antiepileptic monitoring
Yelowitz, Economic Inquiry 2000. Using the Medicare Buy-In Program to Estimate the Effect of Medicaide on SSI Participation

The implementation of the QMB program offered a substitute for Medicaid for the elderly, and is found to have reduced participation in the Supplemental Security Income (SSI) program.

Medicaid, Supplemental Security Income, SSI, QMB, SLMB
Yelowitz, Journal of Public Economics 2000. Public Policy and Health Care Choices of the Elderly: Evidence From the Medicare Buy In Program

Using expansions in the Medicaid program for the elderly, this study finds that for every 100 elderly who became eligible, approximately 50 took up Medicaid but more than 30 dropped private Medigap coverage.

Medicaid, Medicare, Health Insurance, Crowd-Out, Aging
Currie and Yelowitz, Journal of Public Economics 2000. Are Public Housing Projects Good for Kids?

We examine the effect of public housing participation on housing quality and educational attainment. Project households are less likely to suffer from overcrowding or live in high-density complexes. Project children are less likely to have been held back.

Public Housing, Children, Instrumental Variables, Welfare, Education
Gruber and Yelowitz, Journal of Political Economy 1999. Public Health Insurance and Private Savings

We assess the effect of a means- and asset-tested social insurance program, Medicaid, on the savings behavior of households. Medicaid eligibility had a sizable and significant negative effect on wealth holdings.

Medicaid, Savings, Asset Testing
Yelowitz, Journal of Human Resources 1998. Will Extending Medicaid to Two-Parent Families Encourage Marriage?

Several welfare programs restrict eligibility to single-parent families. This study asks whether eliminating this restriction for Medicaid encourages marriage. Medicaid reforms were associated with an increase in the probably of marriage of 1.7 percentage points.

Medicaid, Marriage Decisions
Yelowitz, Journal of Health Economics 1998. Why Did the SSI-Disabled Program Grow So Much? Disentangling the Effect of Medicaid

Using a two-stage least squares strategy, I show that rising Medicaid expenditure significantly increased SSI participation among adults with low permanent incomes, explaining 20% of the growth in enrollment.

Medicaid, SSI Disability
Yelowitz, Quarterly Journal of Economics 1995. The Medicaid Notch, Labor Supply, and Welfare Participation: Evidence From Eligibility Expansions

I assess the impact of losing public health insurance on labor market decisions of women by examining a series of Medicaid eligibility expansions targeted toward young children. Increasing the income limit for Medicaid resulted in a decrease in welfare participation and increase in labor force participation.

Medicaid, AFDC, Welfare, Notch
news
Kentucky Tonight - September 19, 2016
2016-09-19 Aaron Yelowitz Media

Forecasting the U.S. Economy

I appeared on KET's Kentucky Tonight for the topic Forecasting the U.S. Economy. Bill Goodman was the host, and others participating in the discussion were Brian Strow (WKU), Chris Phillips (Somerset CC), and Malcolm Robinson (Thomas More College)

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Topics included current labor market conditions, TPP trade agreement, impact of health care on the economy, lack of labor force participation in Eastern Kentucky and role for subsidies in college.

An extended summary by John Gregory of the topics appears on KET or here.

Paid Sick Leave - July 24, 2016
2016-07-24 Aaron Yelowitz Media

Learning From Experience on Paid Sick Leave

The Orange County Register discusses my work on paid sick leave with Tom Ahn published in Applied Economics Letters. An abstract follows, as well as the commentary.

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In 2012, Connecticut became the first state to enact paid sick leave legislation. Using a difference-in-differences framework, we find the law had modest but negative effects on the labor market, particularly on the likelihood of working in the past week.

Download the Connecticut study or the Orange County Register commentary.

President Obama JAMA Article - July 12, 2016
2016-07-12 Aaron Yelowitz Media

United States Health Care Reform

President Obama recently wrote a sole-authored article for the Journal of the American Medical Association that cites my study - Impacts of the Affordable Care Act on Health Insurance Coverage in Medicaid Expansion and Non-Expansion States (with Charles Courtemanche, James Marton, Benjamin Ukert, and Daniela Zapata). President Obama cites our study in the context "Recent analyses have concluded these gains (in insurance coverage) are primarily because of the ACA, rather than other factors such as the ongoing economic recovery." A description of our study is below.

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The Affordable Care Act (ACA) aimed to achieve nearly universal health insurance coverage in the United States through a combination of insurance market reforms, mandates, subsidies, health insurance exchanges, and Medicaid expansions, most of which took effect in 2014. This paper estimates the causal effects of the ACA on health insurance coverage using data from the American Community Survey. We utilize difference-in-difference-in-differences models that exploit cross-sectional variation in the intensity of treatment arising from state participation in the Medicaid expansion and local area pre-ACA uninsured rates. This strategy allows us to identify the effects of the ACA in both Medicaid expansion and non-expansion states. Our preferred specification suggests that, at the average pre-treatment uninsured rate, the full ACA increased the proportion of residents with insurance by 5.9 percentage points compared to 3.0 percentage points in states that did not expand Medicaid. Private insurance expansions from the ACA were due to increases in both employer-provided and non-group coverage. The coverage gains from the full ACA were largest for those with incomes below the Medicaid eligibility threshold, non-whites, young adults, and unmarried individuals. We find some evidence that the Medicaid expansion partially crowded out private coverage among low-income individuals.

Download the Courtemanche, et al. 2016 study.

Marketwatch Write-up on Diamonds - May 26, 2016
2016-05-26 Aaron Yelowitz Media

Consumers can save serious money on diamonds

I recently spoke with Elliot Blair Smith about my work on diamonds (with Frank Scott). The article is Young Americans' twin debt problems: marriage and college. A description is below.

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A quick aside: If your eye is set on a rock, you often can find pretty good deals just this side of the half-carat and full carat diamonds that fetch a price premium.

"The key lesson for consumers is: There is a big discount - up to 20% - to purchasing loose diamonds that are slightly under 1 carat or 0.5 carats, even though the diamonds are otherwise the same quality. The visual difference is imperceptible," says University of Kentucky economist Aaron Yelowitz, co-author of the paper, "Pricing Anomalies in the Market for Diamonds: Evidence of Conformist Behavior. "However," Yelowitz adds, "some couples may feel that it sends a bad signal between each other if the groom is cheap or prudent, even if no one else knows the diamond is slightly smaller. Couples pay a substantial premium for 'boasting rights'."

Download the Marketwatch article.

Download the Scott & Yelowitz, 2010 study.

San Francisco Formula Retail Ordinance - May 19, 2016
2016-05-19 Aaron Yelowitz Media

Evaluation of San Francisco's Formula Retail Ordinance

I recently coauthored a paper Weighing Priorities for Part-Time Workers, evaluating scheduling regulations in San Francisco. A description is below.

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In recent years, San Francisco has led the charge for additional workplace mandates. These include a higher minimum wage, paid sick leave, and the availability of a "fair" schedule.

The city was the first to enact legislation on this latter point, passing the Formula Retail Employee Rights Ordinance in late 2014. San Francisco's law requires most "chain" stores, as well as their contractors, to provide schedules to employees two weeks in advance, establishes a series of financial penalties for schedule changes that occur less than a week before the scheduled work day, and requires additional work to be offered to part-time staffers before additional employees are hired. To better understand the initial impact of this ordinance, this study provides two key pieces of data: A profile of the affected part-time workforce in San Francisco, California, and direct feedback from 52 "formula retail" establishments that have been affected by the law. Dr. Aaron Yelowitz of the University of Kentucky used data from the Census Bureau's American Community Survey, the Current Population Survey and the Survey of Income and Program Participation to examine the part time workforce in the specific industries impacted by San Francisco's law. He finds the following:

Just one in seven (13.9 percent) of part-time workers in San Francisco are estimated to be working that schedule involuntarily;

Formula retail establishments have a higher proportion of students as part-time workers

28.3 percent versus 6.7 percent at all establishments. These data cast doubt on a basic premise of the legislation that part-time workers in San Francisco are plagued by "insufficient" hours. Rather, most are voluntarily working part-time.

Also important for policymakers to understand is how San Francisco businesses have reacted to the scheduling mandate. Dr. Lloyd Cordor and his research team at CorCom designed a survey of 52 formula retail businesses operating within San Francisco that were affected by this law.

To respond to these new requirements formula retailers are now less flexible with employees schedule changes (35 percent), offering fewer part-time positions (21 percent), scheduling fewer employees per shift (19 percent) and offering fewer jobs across the board (17 percent).

The law's proponents may be satisfied with the unintended consequences of the formula retail law - fewer part-time position, and less flexibility for those that remain - but they appear to be at odds with the preferences of the employees.

Download the study.

Download Op Ed in San Francisco Chronicle.

Washington Times Editorial - April 27, 2016
2016-04-27 Aaron Yelowitz Media

Taking Nanny to Dinner

My work on menu mandates is discussed in this Washington Times editorial.

Read more →

Download the editorial.

Download the Cato study.

Steve Gruber Show - April 25, 2016
2016-04-25 Aaron Yelowitz Media

Menu Mandates: A Futile Effort

I recently spoke with Steve Gruber about the menu mandates in Obamacare. The clip starts around 8:40 into the show.

Read more →

Download the Cato study.

Download the podcast.

CoinDesk Coverage of Bitcoin - April 24, 2016
2016-04-24 Aaron Yelowitz Media

The Four Types of Bitcoin Users

Dr. Paul Ennis discusses my Google Trends study with Matthew Wilson of University of Michigan.

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Download the CoinDesk article or our Bitcoin Study.

Health Economics - April 22,2016
2016-04-22 Aaron Yelowitz Media

Courtemanche, Marton & Yelowitz, 2016

Health Economics has posted "Who Gained Insurance Coverage in 2014, the First Year of Full ACA Implementation?" (with Charles Cortemanche and James Marton).

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The most significant pieces of the Affordable Care Act (exchanges, subsidies, Medicaid expansion, and individual mandate), implemented in 2014, were associated with sizable gains in coverage nationally that were divided equally between gains in Medicaid and private coverage. These national trends mask heterogeneity in gains by state Medicaid expansion status, age, income level, and source of coverage.

Download the study.

KTRH Radio - April 14,2016
2016-04-14 Aaron Yelowitz Media

Cato Policy Analysis cited on KTRH Radio

Daily Caller - April 13,2016
2016-04-13 Aaron Yelowitz Media

Study Blasts Obamacare's Menu Mandates As Having Zero Impact on Obesity

Guy Bentley has a nice write-up in "The Daily Caller" on my recent menu mandates paper.

Read more →

Download the study or Daily Caller article.

Menu Mandates and Obesity: A Futile Effort - April 13,2016
2016-04-13 Aaron Yelowitz Media

New Cato Institute Policy Analysis Paper

Cato Institute released my Policy Analysis paper entitled "Menu Mandates and Obesity". An executive summary appears below.

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One provision of the Patient Protection and Affordable Care Act (ACA) that has been delayed until 2017 is a federal mandate for standard menu items in restaurants and some other venues to contain nutrition labeling. The motivation for so-called "menu mandates" is a concern about rising obesity levels driven largely by Americans' eating habits. Menu mandates have been implemented at the state and local level within the past decade, allowing for a direct examination of the short-run and long-run effects on outcomes such as body mass index (BMI) and obesity. Drawing on nearly 300,000 respondents from the Behavioral Risk Factor Surveillance System (BRFSS) from 30 large cities between 2003 and 2012, we explore the effects of menu mandates. We find that the impact of such labeling requirements on BMI, obesity, and other health-related outcomes is trivial, and, to the extent it exists, it fades out rapidly. For example, menu mandates would reduce the weight of a 5'10" male adult from 190 pounds to 189.5 pounds. For virtually all groups explored, the long-run impact on body weight is essentially zero. Analysis of subgroups suggests that to the extent that menu mandates affect short-run outcomes, they do so through a "novelty effect" that wears off quickly. Subgroups that were thought likely to experience the largest gains in knowledge from such mandates exhibit no short-run or long-run changes in weight.

Download the study.

WSJ: Flexible Work Schedules - March 30,2016
2016-03-30 Aaron Yelowitz Media

A Stiff Jab at Flexible Work Schedules

Michael Saltsman of Employment Policies Institute wrote commentary today in "The Wall Street Journal" that cites my work. The commentary appears below.

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Labor unions in California won't be taking a break after their victory Monday, when legislators and Gov. Jerry Brown announced a tentative deal to raise the state's minimum wage to $15 an hour by 2022. Another economically destructive campaign is already under way: Unions want lawmakers to dictate how businesses schedule employees' work.

The idea first gained traction in San Francisco when a coalition of labor unions and union-backed organizations joined together to advocate for a "Retail Workers Bill of Rights" ordinance early in 2014. The ordinance passed later that year and took effect in July 2015.

The entitlements include: a requirement that employers provide work schedules two weeks in advance, with a penalty of up to four hours of pay for subsequent changes; a requirement to provide up to four hours of penalty pay for scheduled on-call shifts when the employee is told not to report; and a requirement to offer more work to certain part-timers before hiring additional staff. The challenges these provisions present should not be surprising to anyone familiar with the inefficiencies of a unionized workplace.

For instance, imagine an ice-cream shop faced with an all-day rainstorm during peak summer season. A work schedule created two weeks earlier could not have anticipated the storm and the resulting lull in customers. No matter: The late schedule change means that the shop must pay workers whose help is no longer needed. For a business with small profit margins, a few such scheduling problems could mean the difference between a profitable and unprofitable summer.

Six months after the San Francisco ordinance took effect, a survey team led by Lloyd Corder, president of CorCom Inc., a market research firm, spoke with 52 businesses affected by the law. (The Employment Policies Institute, where I work, provided support for his research.) His forthcoming study reports that one in five responding businesses had already cut back on the number of part-time positions, and a similar number were now scheduling fewer employees per shift. More than one-third of responding businesses offered employees less flexibility to make changes to their schedule once it was set.

This is cruelly ironic, as most of the employees affected by the changes were specifically looking for flexible part-time work. Using Census Bureau data, University of Kentucky economist Aaron Yelowitz estimated that 86% of the affected part-time employees in San Francisco were working part-time voluntarily. (For example, nearly 30% were enrolled in school, and 16% were women with children.) Legislators elsewhere should take note. In Washington, D.C., where the city council is considering a similar ordinance, Mr. Yelowitz finds that only one in seven of the affected part-timers are working part-time involuntarily.

Labor unions that advocate these work-schedule changes claim to have the best interests of part-time workers at heart. In reality, a workplace forced to have more full-time employees might be easier to organize. Forcing nonunion firms to comply with arduous scheduling rules also levels the playing field for unionized businesses, which likely face these mandates already in a collective-bargaining agreement. It is no help to students and others who would prefer a flexible schedule to someone else's arbitrary definition of a "fair" one.

Download the commentary.

Life Insurance and Well-Being - March 27,2016
2016-03-27 Aaron Yelowitz Media

Life Insurance Holdings and Well-Being of Surviving Spouses

I recently coauthored a paper "Life Insurance Holdings and Well-Being of Surviving Spouses" with Tim Harris. An abstract follows.

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Abstract: Premature death of a breadwinner can have devastating financial consequences on surviving dependents. This study investigates the role of life insurance in mitigating the long-run financial consequences of spousal mortality. Using the Health and Retirement Study, we examine individuals whose spouses died during or soon after his or her peak earnings years. Using an instrumental variables approach, we find that lump-sum life insurance payouts do not significantly influence spousal well-being.

Download the paper.

Part-time workers - March 23, 2016
2016-03-23 Aaron Yelowitz Media

Washington Post Op-Ed

I recently coauthored an Op-Ed in The Washington Post, evaluating proposed scheduling regulations. A description is below.

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A flexible work schedule of less than 40 hours a week used to be considered part-time. Today, worker advocates in the District have another word for it: Unfair.

Legislation under consideration by the D.C. Council would require employers to provide schedules three weeks in advance and penalize them for changes that happen after that. It's designed to reduce scheduling variability in the retail and restaurant industries, but our new analysis of the proposal, based on government data and interviews with 100 affected businesses, suggests caution is necessary before proceeding.

The proposed legislation for the District is based on a similar ordinance enacted last year in San Francisco. The District's law would cover restaurants that are part of a chain with 20 or more locations nationwide and retail businesses with five more or locations across the country. In addition to the penalties for schedule changes, the bill would require these employers to offer additional work to part-timers before hiring more staff.

To determine the legislation's impact, we first used two different Census Bureau data sets - the American Community Survey and the Current Population Survey - to create a profile of the affected part-time employees at the District's restaurant and retail businesses. A few conclusions emerge: While nearly 70 percent of the District's workforce has a four-year college degree or more, just one in five of these 11,500 part-timers has the same. Nearly 40 percent have a high school degree or less, and many of them (27 percent) are active students.

Given these characteristics, it's perhaps unsurprising that just one in seven (14 percent) of these part-timers is estimated to be working that schedule involuntarily. (In our survey of D.C. employers, we found a similar result: 70 percent of surveyed employers indicated that the vast majority of their part-time staff was only seeking part-time work.) These are important insights: If the workers in question are mostly working a part-time schedule because it fits their lifestyle needs, then legislation that adversely affects this flexibility would hurt the people it's supposed to help.

Unfortunately, that's exactly what our survey of affected businesses suggests will happen.

Businesses were most concerned about the provision that requires four hours of pay for any schedule change made with less than 24 hours notice. More than 70 percent of businesses indicated that it would be difficult to comply with this law; for full-service restaurants, that number reached 95 percent. Majorities of employers were also concerned about a requirement to provide schedules three weeks in advance and to provide an hour of pay for shift changes made after that.

To adapt to the new costs and regulatory burdens imposed by the law, D.C. retailers and restaurants anticipated taking a few steps. Nearly three of four respondents said they'd offer less flexibility to make schedule changes. Half of surveyed employers indicated they would offer fewer part-time positions and change the hiring composition of full-time vs. part-time employees. These consequences may be intended by the law's proponents, but it seems likely that employees who are voluntarily working part-time won't appreciate them.

Perhaps because of the nature of the affected businesses, this bill promises to create unique hardships, even compared with other hotly debated policy proposals. We asked employers about the difficulty of complying with a series of the District's employment current or proposed requirements, including an $11.50 minimum wage, a 16-week paid leave plan and paid sick leave. Thirty percent of employers indicated that this scheduling ordinance would be the most difficult to comply with - a greater percentage than any other proposal.

D.C. Council members should bear this in mind: In an attempt to create fairer schedules, they may create consequences that are deeply unfair for the city's part-time workforce.

Download the Op-Ed.

Hours and Scheduling Stability Act - March 22, 2016
2016-03-22 Aaron Yelowitz Media

Washington DC's Proposed Scheduling Law Would Reduce Job Flexibility and Opportunities

I recently coauthored a paper Fairness vs. Flexibility, evaluating proposed scheduling regulations. A description is below.

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The debate over whether to raise the minimum wage has expanded in recent years to encompass demands for additional workplace benefits. These include health care, paid sick leave, and most recently the availability of a "fair" schedule. The City of San Francisco was the first to enact legislation on this latter point, enacting the Formula Retail Employee Rights Ordinance on July 3, 2015. San Francisco's law requires most "chain" stores, as well as their contractors, to provide schedules to employees two weeks in advance, establishes a series of financial penalties for schedule changes that occur less than a week before the scheduled work day, and requires additional work to be offered to part-time staffers before additional employees are hired. Washington, DC, is now considering similar legislation that applies to retailers and chain restaurants in the District. Labor advocates argue that the law is necessary to "[promote] full-time work" at these businesses; in a report supporting their campaign, they argue that these employees "struggle with low wages, too few hours, and fluctuating hours." Thus far, the research they've provided to document this problem comes mostly from data that labor organizers collected themselves. To better understand the impact of the proposed ordinance, this study provides two key pieces of data: A profile of the affected part-time workforce in Washington, DC, and direct feedback from 100 businesses that would be affected by the law.

Dr. Aaron Yelowitz of the University of Kentucky used data from the Census Bureau's American Community Survey and the Current Population Survey to examine part-time workers in the specific industries that would be impacted by DC's law.

He finds the following:

Just one-in-seven (14 percent) of the affected employees are estimated to be working parttime involuntarily

27 percent are currently enrolled in school, compared to nine percent of the entire workforce

38 percent have a high school diploma or less, and

80 percent have less than a four-year college degree.

These data cast doubt on the notion that part-time employees at DC's retailers and restaurants are being forced to work that schedule; rather, most are voluntarily working part-time.

Also important for policymakers to understand is how DC businesses will react to new scheduling mandates. Dr. Lloyd Corder and his survey research team at CorCom designed a survey of 100 restaurant and retail businesses in Washington, DC, that would likely be affected by this law.

A majority of businesses say it will be difficult to post employees schedules 21 days in advance of the work week (55%), as the law would require. Even more think the financial penalties will be onerous: For instance, most (71%) say the law's provision that requires four hours of pay for each change that happens less than 24 hours before the scheduled shift would be extremely difficult to comply with. A majority (59%) agreed that providing employees one hour of pay for each change that happens fewer than 21 days before the scheduled work week would also be extremely difficult to manage and comply with.

If the ordinance passes, businesses are likely to reduce their part-time workforce and implement other restrictions, such as offering employees less flexibility to make schedule changes (73%), offering fewer part-time positions (52%), changing the hiring composition of full versus part-time employees (50%), offering fewer jobs across the board (50%) and scheduling fewer employees per shift (50%).

These consequences - of fewer part-time positions, and of less flexibility in the positions that remain - may be the goal of the law's proponents, but they appear to be at odds with the preferences of the employees who are voluntarily working those jobs.

Download the study.

Journal of Labor Research - March 14, 2016
2016-03-14 Aaron Yelowitz Media

Submit papers to JOLR

I recently joined the Editorial Board of Journal of Labor Research, and would encourage those doing high quality research to submit papers there. A description of JOLR's aims is below.

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The Journal of Labor Research provides an outlet for original research on all aspects of behavior affecting labor market outcomes. The Journal provides a forum for both empirical and theoretical research on labor economics. The journal welcomes submissions issues relating to labor markets and employment relations, including labor demand and supply, personnel economics, unions and collective bargaining, employee participation, dispute resolution, labor market policies, types of employment relationships, the interplay between labor market variables and policy issues in labor economics are published by the Journal. The Journal of Labor Research also publishes book reviews relating to these topics.

Paid Sick Leave - March 1, 2016
2016-03-01 Aaron Yelowitz Media

Paid Sick Leave and Absenteeism: The First Evidence from the U.S.

In a new working paper with Tom Ahn, we examine the impact of paid sick leave (PSL) in the United States. The paper is available on SSRN. An abstract follows below.

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Abstract: Using a balanced sample of workers from the NHIS, we estimate of the impact of paid sick leave (PSL) insurance on absenteeism in the United States. PSL increases absenteeism by 1.2 days per year, a large effect given the typical benefit duration. Consistent with moral hazard, the effects are concentrated in moderate sick days, not severe ones. In addition, we merge the NHIS with Google Flu Trends. Severe influenza outbreaks lead workers to exhaust sick days, consequently leading to a replacement rate of zero for additional absences. Consistent with a lower replacement rate, worker absenteeism is reduced on the margin.

Download the study.

Bitcoin study - Top Downloads - December 9, 2015
2015-12-09 Aaron Yelowitz Media

Most read articles 2015: Applied Economics Letters

Applied Economics Letters lists their top downloads. My study on Bitcoin (with Matthew Wilson) is on the list, and appears to be open-access.

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Download the paper.

Intent vs. Impact - November 18, 2015
2015-11-18 Aaron Yelowitz Media

Dallas Federal Reserve Conference

The Federal Reserve Bank of Dallas, in partnership with the Department of Economics at Southern Methodist University hosted the conference Intent vs. Impact: Evaluating Individual- and Community-Based Programs. Organizers included Daniel Millimet of SMU and Wenhua Di of the FRB of Dallas. I presented my work on housing costs and well-being.

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Abstract: The Supplemental Poverty Measure (SPM) - which serves as an indicator of economic well-being in addition to the official poverty rate - was introduced in 2010 and explicitly adjusts for geographic differences in the cost of housing. By embedding housing costs, the SPM diverges from official measures in some instances, offering a conflicting view on family well-being. However, there is limited direct evidence of the impact of housing affordability on household well-being, and virtually of all it focuses on food insecurity. This study examines the impact of local housing affordability on household well-being using the "basic needs" data from the Survey of Income and Program Participation (SIPP). Across a wide variety of specifications, no evidence is found that housing costs impact well-being. In contrast, local labor market conditions do impact the well-being measures in many specifications. The findings call into question one of the key motivations for the SPM - that geographic cost differences are a major factor for household well-being.

Download the study.

Is reducing disparity enough? - November 4, 2015
2015-11-04 Aaron Yelowitz Media

Write-up in Healthcare Economist

Jason Shafrin has written up a discussion of a recent open-access study I published with Jim Marton in Health Services Research on racial and ethnic disparities in Medicaid managed care.

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Open Access study on racial disparities - October 13, 2015
2015-10-13 Aaron Yelowitz Media

Medicaid Managed Care and Disparities

Along with Jim Marton of Georgia State University, we have a new, open-access, published study in Health Services Research on racial and ethnic disparities in Medicaid managed care.

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Objective: To estimate the impact of different forms of Medicaid managed care (MMC) delivery on racial and ethnic disparities in utilization.

Data Source: Longitudinal, administrative data on 101,649 children in Kentucky continuously enrolled in Medicaid between January 1997 and June 1999. Outcomes considered are monthly professional, outpatient, and inpatient utilization.

Study Design: We apply an intent-to-treat, instrumental variables analysis using the staggered geographic implementation of MMC to create treatment and control groupsof children.

Principal Findings: The implementation of MMC reduced monthly professional visits by a smaller degree for non-whites than whites (3.8 percentage points vs. 6.2 percentage points), thereby helping to equalize the initial racial/ethnic disparity inutilization. The Passport MMC program in the Louisville-centered region statisticallysigni?cantly reduced disparities for professional visits (closing the gap by 8.0 percentage points), while the Kentucky Health Select MMC program in the Lexington-centered region did not. No substantive impact on disparities was found for either outpatient or inpatient utilization in either program.

Conclusions: We ?nd evidence that MMC has the possibility to reduce racial/ethnic disparities in professional utilization. More work is needed to determine which managed care program characteristics drive this result.

Download the early view version of the open access paper.

Working paper on employer sponsored life insurance - October 9, 2015
2015-10-09 Aaron Yelowitz Media

Nudging Life Insurance Holdings in the Workplace

Along with Tim Harris, we have a new working paper on employer sponsored life insurance.

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Using administrative data from a large public university, we analyze a policy designed to increase employer-sponsored life insurance. The University always had a supplemental life insurance plan available for its workers. In 2008, it increased its provision of basic coverage from a $10,000 to 1x salary. Workers initially paying for supplemental life insurance were in a position to completely undo the increase in basic coverage by scaling back supplemental elections, yet their default choice in 2008 was to continue at their existing level from 2007. The increased provision of basic coverage therefore represents a nudge for employees to increase life insurance. The nudge increased life insurance holdings one-for-one, both in the short and long-run, even for workers who actively made changes to other fringe benefits. New hires, who had to make an active choice, elected less supplemental coverage after 2008 relative to earlier cohorts of new hires, providing additional evidence of a signicant degree of inertia among existing workers. Additionally, we find evidence of inertia for high earners constrained by the maximum. Data from a national sample of job changers show minimal crowd-out of individual market coverage from increased employer-sponsored life insurance. Further, we discuss the desirability of the nudge and find that the increase in basic coverage decreased life insurance disparities for two-thirds of employees.

Download the working paper.

Steve Gruber Show - August 14, 2015
2015-08-14 Aaron Yelowitz Media

The Obamacare Smoking Tax

I recently spoke with Steve Gruber about the smoker's tax in Obamacare.

Read more →

Download the blog post.

Download the podcast.

Black Enterprise - August 7, 2015
2015-08-07 Aaron Yelowitz Media

study: Blacks Own More Life Insurance Than Whites

I recently spoke with Stacey Tisdale of Black Enterprise about racial disparities in life insurance coverage, a paper I wrote with Tim Harris

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We evaluate the extent to which there are racial disparities in life insurance coverage using multiple years of the Survey of Income and Program Participation between 2001 and 2010. We find that African-Americans hold significantly more life insurance after controlling for other factors, especially employer-sponsored and whole life insurance. We demonstrate that our findings diverge from prior work because we examine all households instead of focusing exclusively on married and cohabitating households. The findings on life insurance coverage and composition imply that earnings shocks due to mortality are not a contributing factor to racial disparities in wealth.

Download the working paper or the Black Enterprise article.

Money's Edge - Bitcoin - August 6, 2015
2015-08-06 Aaron Yelowitz Media

Write-up on Bitcoin

Maria Wood discusses my work published in Applied Econonomics Letters in an article entitled Who Seeks Bitcoins? Study Pinpoints Probable User Groups. Download the Money's Edge article.

Los Angeles Minimum Wage - August 5, 2015
2015-08-05 Aaron Yelowitz Media

Caution needed on minimum wage in unincorporated L.A. County

Michael Saltsman of EPI writes in the Pasadena Star-News about my analysis of the impact of a $15 minimum wage in unincorporated Los Angeles County.

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Download the commentary or the full report.

Phys.Org - Bitcoin - August 4, 2015
2015-08-03 Aaron Yelowitz Media

Write-up on Bitcoin

Phys.org discusses my work published in Applied Econonomics Letters in an article entitled "Bitcoin virtual currency users and motivations". Download the Phys.org article.

Wired Magazine - Bitcoin - August 3, 2015
2015-08-03 Aaron Yelowitz Media

Write-up on Bitcoin

Katie Collins discusses my work published in Applied Econonomics Letters in an article entitled Bitcoin Users Are All Tech Enthusiasts or Criminals, Study Concludes. Download the Wired UK article.

Wikipedia - Bitcoin - July 31, 2015
2015-07-31 Aaron Yelowitz Media

Discussion of Yelowitz & Wilson Study

The Wikipedia entry for Bitcoin discusses my work published in Applied Econonomics Letters. Download the Wikipedia entry.

Taylor & Francis Newsroom - July 31, 2015
2015-07-31 Aaron Yelowitz Media

Discussion of Yelowitz & Wilson Study

The Taylor & Francis Newroom released Bitcoin virtual currency users and motivations: a haven for criminals? which discusses my work on Bitcoin.

Los Angeles Minimum Wage - July 31, 2015
2015-07-31 Aaron Yelowitz Media

The Impact of a $15 Minimum Wage

Michael Antonovich, the most senior-serving member of the Los Angeles Board of Supervisors, has posted my analysis of the impact of a $15 minimum wage in unincorporated Los Angeles County.

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Download the full report.

Smokers and health insurance - July 29, 2015
2015-07-29 Aaron Yelowitz Media

Smokers and health insurance: good and bad news

Jacob Grier discusses my blog post on the the smoker's tax in Obamacare.

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Thank You For Smoking - July 17, 2015
2015-07-17 Aaron Yelowitz Media

Obamacare's Not-So-Hidden Tax: Thank You for Smoking

I've posted on the Cato blog about the smoker's tax in Obamacare.

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Download the blog post.

The Everyday Economist - July 17, 2015
2015-07-17 Aaron Yelowitz Media

Discussion of Yelowitz & Wilson Study

A thank you to The Everyday Economist for citing my work on Bitcoin.

Earn $62k, Get Health Insurance for $58/Year - July 9, 2015
2015-07-09 Aaron Yelowitz Media

The Obamacare Giveaway, Connecticut Edition

I've posted on the Cato blog about the premium tax credit in Connecticut.

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Download the blog post.

Who Pays More: A 64-Year-Old or 30-Year-Old - July 7, 2015
2015-07-07 Aaron Yelowitz Media

The Obamacare Giveaway - It's better to be 64 than 30 (sometimes)

I've posted on the Cato blog about how the premium tax credit can create bizarre redistribution from the young to the old.

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Download the blog post.

Earn $62k, Get Free Health Insurance - July 6, 2015
2015-07-06 Aaron Yelowitz Media

The Obamacare Giveaway, Wisconsin Edition

I've posted on the Cato blog about the premium tax credit in Wisconsin.

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Download the blog post.

One Consequence of King v. Burwell - June 25, 2015
2015-06-25 Aaron Yelowitz Media

Why Shop Prudently?

I've posted on the Cato blog about the King v. Burwell decision.

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Download the blog post.

What Google Tells Us About Bitcoin Users - June 19, 2015
2015-06-19 Aaron Yelowitz Media

Discussion of Yelowitz & Wilson Study

I recently spoke with Anna Lothson, an editor for PYMNTS.com about my work on Bitcoin.

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Download the article.

The Obamacare Reporting Loophole - June 18, 2015
2015-06-18 Aaron Yelowitz Media

Why It Makes Sense To Report Income at the Poverty Line

I've posted on the Cato blog about the Obamacare reporting loophole.

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Download the blog post.

The Economic Consequences of the ACA Notch - June 16, 2015
2015-06-16 Aaron Yelowitz Media

Earning an extra $1 might lose a family $16,000 in subsidy

I've posted on the Cato blog about the ACA notch.

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Download the blog post.

Obamacare Earnings Cliff - June 12, 2015
2015-06-15 Aaron Yelowitz Media

My discussion with Caleb Brown on the Obamacare earnings cliff.

Summer at Cato Institute - June 1, 2015
2015-06-01 Aaron Yelowitz Media

Visiting Scholar at Cato Institute

I will be spending much of the summer in Washington DC as a visiting scholar at Cato Institute. Cato has a very lively event schedule, all touching upon incredibly important policy issues. The people around here are incredibly helpful and hospitable.

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I have a short-run rental in the Chinatown area near the Verizon Center. It's a short 15 minute walk to the Cato building. If you happen to be in Washington D.C., drop me a line. I'll generally be around Monday morning through Friday afternoons until the end of July.

VEAM FEST - May 18, 2015
2015-05-18 Aaron Yelowitz Media

Vanderbilt Empirical Applied Microeconomics Festival

I presented the the paper "A Bad Nudge? Inertia vs. Crowd-Out in the Life Insurance Market" (with Tim Harris) at the Vanderbilt Empirical Applied Microeconomics Festival (VEAM FEST) on May 18, 2015. The conference was organized by Kitt Carpenter and also featured speakers from Middle Tennesse State University, University of Tennessee, Vanderbilt University, University of Louisville, University of Alabama - Birmingham, and Queen's University.

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Abstract: Using administrative data from a large public university in the southeast, we examine life insurance elections of employees. The university always had a supplemental life insurance plan for workers, and increased its mandatory plan from a small death benefit to 1x salary in 2008. For a subset of workers initially choosing supplemental life insurance coverage, the increase from the mandatory plan could be completely undone by scaling back supplemental elections and therefore represents a nudge to increase life insurance coverage. The nudge increased life insurance holdings one-for-one, both in the short-run and long-run, even for employees who actively made changes to other fringe benefits. New hires after 2008 scaled back supplemental holdings relative to earlier cohorts of new hires, indicating a significant degree of inertia among existing workers. Data from the SIPP show that purchases in the individual life insurance market fall when the generosity of employer sponsored life insurance rises. Implications for worker well-being are discussed.

Download the presentation.

Prison-To-Work Study Presentation - May 5, 2015
2015-05-05 Aaron Yelowitz Media

Washington D.C. Presentation

I presented the empirical findings from "Prison-To-Work: The Benefits of Intensive Job-Search Assistance for Former Inmates" (with Chris Bollinger and CBER) at a dinner/discussion at the Jefferson Hotel in Washington DC on May 5, 2015. Senator Cory Booker of New Jersey discussed issues related to criminal justice reform and Peter Cove and Lee Bowes of America Works discussed the real world intricacies of job search assistance for ex-offenders. The president of Manhattan Institute, Lawrence Mone, which funded the CBER study, also offered his perspectives.

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Senator Cory Booker

Good evening everyone. My name is Aaron Yelowitz, and I'm an associate professor in the Economics Department at University of Kentucky. I received my PhD in economics from MIT in 1994, and for my 20 year career have worked on a variety of public policy issues, often related to low income or vulnerable groups.

I want to start off my remarks by expressing my gratitude to Howard Husock of Manhattan Institute, whom I have known for the last 5 years. I've worked on a variety of projects in collaboration with Howard (and Manhattan Institute), and through repeated interactions, am probably known to them as both an economist and data geek.

Several years ago, Howard approached me on an intriguing but stalled project that Manhattan Institute had with a former contractor, and initially my role was to see if the project could be salvaged. The project - on rapid attachment back to the workforce for ex-offenders - was exciting because the study relied on a randomized controlled trial to evaluate its effectiveness. Essentially the intervention was between intensive job search assistance in a concentrated period of time versus more-or-less self-directed search. It was administered by a private, for-profit staffing agency, America Works. For those involved in economics like myself, it is rare to obtain data on a randomized intervention that can so be used so convincingly to learn about the efficacy of a program.

At the same time, I had serious reservations because the number of participants was pretty small - around 250 - and because the former contractor had not collected data on follow-up outcomes after the randomized intervention.

After further investigation, I suggested that in conjunction with my colleague, Chris Bollinger and the Center for Business and Economic Research at University of Kentucky, I could do the follow-up data analysis, but given the small samples, I tried to recalibrate expectations on finding significant results.

Ideally, I would have liked to examine the impact on intensive job search assistance on employment, welfare use, and criminal recidivism. Due to data and budgetary limitations, we were only able to examine recidivism. Nonetheless, from the self-interested taxpayer's point of view, it matters to know whether spending more money up front for job search reduces crime down the road.

Although I tried to recalibrate expectations, I was surprised when we analyzed the data. What we found was that intensive job assistance matters, but only for certain kinds of ex-offenders. Those with a non-violent arrest history before enrollment in America Works and especially those with fewer charges were the ones who benefited most from the program. At the same time, we did not find any effect of intensive assistance on recidivism for violent ex-offenders.

Only 31% of nonviolent ex-offenders who received enhanced training were arrested during the 3 years in which they were tracked, compared with 50% of similar participants who received standard training. In contrast, former inmates with histories of violence were rearrested at virtually the same pace, whether they received enhanced training or not, at a clip of around 43%.

There is also a large literature measuring the social cost of crime. Unsurprising, violent offenses impose extremely large costs on society, but even fairly common non-violent crimes add up too. For ex-offenders with non-violent arrest histories, we find that the reduction in subsequent crime far outweighs the costs of about $5,000 for each former inmate.

In many ways, our data speaks to a logical economic story: for an ex-offender who had been locked up on drug charges or parole violations, intensive assistance to help him explain in a job interview why he has a checkered history can help him land a job and then stay out of trouble, but for an ex-offender who had assaulted someone in the past, the barriers are simply too high for even this kind of concentrated job assistance.

Our work provides informative answers for the criminal justice system that we have now - what economists call "internal validity". However, our work, doesn't answer more fundamental questions, such as the sensibility of current criminal sentences, or given the news events over the past year, what would be appropriate reforms in policing. Even within our narrow framework, questions about integrating ex-offenders with violent histories remain.

Finally, I want to Senator Booker for his insights and Peter Cove for his efforts, as well as everyone here for taking time from their busy schedules to hear about the results from this data analysis. I'm of course delighted to answer any questions that I can tonight or afterwards, and I'll also be a visiting scholar at Cato Institute here in DC during June and July, and am hope to see you again after tonight.

Download the comments.

Working paper on racial disparities in life insurance - April 28, 2015
2015-04-28 Aaron Yelowitz Media

Racial Disparities in Life Insurance Coverage

Along with Tim Harris, we have a new working paper on difference in life insurance coverage by race.

Read more →

We evaluate the extent to which there are racial disparities in life insurance coverage using multiple years of the Survey of Income and Program Participation between 2001 and 2010. We find that African-Americans hold significantly more life insurance after controlling for other factors, especially employer-sponsored and whole life insurance. We demonstrate that our findings diverge from prior work because we examine all households instead of focusing exclusively on married and cohabitating households. The findings on life insurance coverage and composition imply that earnings shocks due to mortality are not a contributing factor to racial disparities in wealth.

Download the working paper.

The Oklahoman - April 9, 2015
2015-04-09 Aaron Yelowitz Media

Improved job readiness programs should be part of corrections reform equation.

The Oklahoman Editorial Board has a nice discussion of my recent Manhattan Institute report, in their editorial Improved job readiness programs should be part of corrections reform equation.

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Download the report.

Download the editorial.

National Review - March 26, 2015
2015-03-26 Aaron Yelowitz Media

A Better Way to Fight Recidivism

Kathryn Jean Lopez of the National Review has an excellent discussion of my recent Manhattan Institute report, entitled A Better Way to Fight Recidivism.

Read more →

Download the report.

Prison-To-Work Study - March 26, 2015
2015-03-26 Aaron Yelowitz Media

Prison-to-Work: The Benefits of Intensive Job-Search Assistance for Former Inmates

My work with Chris Bollinger "Prison-to-Work: The Benefits of Intensive Job-Search Assistance for Former Inmates" was published by Manhattan Institute. An executive summary follows.

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Of the 650,000 inmates released from prisons and jails in the United States each year, as many as two-thirds will be arrested for a new offense within three years. This study evaluates the impact of enhanced job-readiness training and job-search assistance on reducing recidivism rates among ex-offenders.

Programs offering enhanced job assistance are far from the norm. The program used in this study - developed by an employment agency that assists ex-offenders, welfare recipients, and other "hard-to-serve" clients - differs from other job services in scope and focus.

The program, America Works, is condensed into an intense one- or two-week period. It uses a tough-love approach, stressing interpersonal communication and such "soft" skills as time and anger management. It places special attention on teaching practical skills that many former inmates never acquired, such as resume preparation, search strategies, and interview techniques. And it uses a network of employers, who are open to hiring ex-offenders and with whom it has long-term relationships, to place clients. Its goal is not only to help former inmates find jobs but also to keep jobs, and it provides follow-up services for six months. In 2005, the program provided job-readiness classes to 1,000 ex-offenders, placing 700 in jobs.

America Works receives referrals from agencies in New York City, including the city government's Human Resources Administration (HRA), work-release centers, and the city's Rikers Island Correctional Facility. By contrast, typical services offered to ex-offenders provide far less job-readiness training over a less concentrated period. Instead of providing placement services, such programs generally limit assistance to self-directed job searches.

This paper's key finding is that training designed to quickly place former inmates in jobs significantly decreases the likelihood that ex-offenders with nonviolent histories will be rearrested. Only 31.1 percent of nonviolent ex-offenders who received enhanced training were arrested during the 18 to 36 months in which they were tracked, compared with 50 percent of similar participants who received standard training. In contrast, former inmates with histories of violence were rearrested at virtually the same pace, whether they received enhanced training or not: 44.6 percent versus 42.6 percent, respectively. Findings for criminal convictions show similar patterns for arrests. These results suggest that extra help in looking for work upon release from jail or prison can pay off in a big way but not for all types of former offenders. Enhanced assistance is most effective for those without a history of violence and with few prior charges - while the additional help is far less effective for those with a more difficult history, including violence or many prior charges.

Very little research has been conducted on this topic. The results of this study have important implications for government policymakers, public and private social welfare agencies, and, of course, employers. Indeed, at a time of ever-tightening federal and state budgets and ever-rising costs of incarceration, the Obama administration and many state governments are seeking ways to reduce swollen prison populations, particularly the number of nonviolent criminals, partly by using new guidelines for early release. Likewise, many states are scrambling to find programs to sharply cut the number of repeat offenders.

Inmates nevertheless face formidable hurdles in securing employment following release back into society. Often lacking skills to find a job, they typically receive little help, increasing the odds, especially in a still-weak economy, that they will come up empty - and revert to a life of crime and return, eventually, to prison.

By linking enhanced training to a targeted group of ex-offenders, this study points toward a breakthrough in reducing not only the rate of recidivism but also the cost to society. The program used by America Works, which has offices in New York and six other states and the District of Columbia, costs about $5,000 for each former inmate. While the benefits to society from averted crimes are very hard to calculate in dollar terms, the study estimated average savings of about $231,000 for each nonviolent ex-offender who received extra help, based on the lower crime record posted by the group as a whole, following training. This figure represents a 46-fold return on the cost of the training, not counting impossible-to-quantify benefits to individuals involved, their families, and communities.

The intervention of enhanced services was conducted from June 2009 to December 2010, with a randomized trial involving 259 ex-offenders in New York. Participants, all men, had been released from a prison, jail, or youth correctional facility within six months of acceptance into the program. Approximately half of the participants received enhanced employment services from America Works while the other half received typical services, also provided by America Works. Criminal recidivism for 219 ex-offenders was measured from administrative records in July 2012, tracking arrests and convictions of participants in six-month intervals from the point they joined the study for up to 36 months.

Enhanced services had no significant impact on recidivism for the group as a whole. Yet that result masked significant differences among varied segments that formed the group. As previously noted, former inmates with histories of violence were little affected by the extra help while those with nonviolent histories benefited substantially. Even within the latter group, however, significant differences appeared, offering additional clues about where to focus job-training dollars.

Further exploration revealed that enhanced services had the largest impact among nonviolent criminals with the fewest prior charges. Differences were also found among the three subsets of nonviolent offenders: those who had committed offenses involving property, those who had committed crimes involving the sale or possession of drugs, and those who had been involved in minor offenses. Ex-offenders with property crimes and those with minor offenses were found to be most responsible for positive recidivism results. The subset with a history of drug crimes appeared to have no significant impact on recidivism results. Given the small samples, however, caution must be used when interpreting such results.

Collectively, these results suggest that enhanced job-search assistance is most effective for the easiest of the hard-to-serve population - and that focusing future efforts on this group is the most cost-effective approach.

Download the report.

Paid Sick Leave - February 25, 2015
2015-02-25 Aaron Yelowitz Media

The Short-Run Impacts of Connecticut's Paid Sick Leave Legislation

My work with Tom Ahn "The Short-Run Impacts of Connecticut's Paid Sick Leave Legislation" is forthcoming in Applied Economics Letters. An abstract follows.

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In 2012, Connecticut became the first state to enact paid sick leave legislation. Using a difference-in-differences framework, we find the law had modest but negative effects on the labor market, particularly on the likelihood of working in the past week.

Download the working paper.

UNCC Seminar - January 30, 2015
2015-02-03 Aaron Yelowitz Media

Seminar Presentation on Health Insurance and Fertility

On January 30, 2015, I presented "Health Insurance, Fertility, and the Wantedness of Pregnancies: Evidence from Massachusetts" in the UNC Charlotte Economics Seminar Series. Many thanks to all the economists in the department for excellent feedback, and especially Lisa Schulkind and Paul Gaggl for hosting me.

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Health insurance reform in Massachusetts lowered the financial cost of both pregnancy (by increased coverage of pregnancy-related medical events) and pregnancy prevention (by increasing access to reliable contraception and family planning). We examine fertility responses for women of childbearing age in Massachusetts and, on net, find no effect from increasing health insurance coverage. This finding, however, masks substantial heterogeneity. For married women aged 20 to 34 - who have high latent fertility and for whom pregnancies are typically wanted - fertility increased by approximately 1 percent. For unmarried women in the same age range - for whom pregnancies are typically unwanted - fertility declined by 9 percent. Fertility rates changed very little for other groups, in part because of low latent fertility or minimal gains in insurance coverage. Pregnancy wantedness increased in the aggregate through a combination of increasing wanted births and decreasing unwanted births.

Download the working paper.

Graduate Health Economics - January 17, 2015
2015-01-17 Aaron Yelowitz Media

ECO 725 - Graduate Health Economics

At University of Kentucky, we offer a joint Health/Environmental graduate field in alternating years. I am teaching the graduate health class this semester to a mix of second- and third-year Ph.D. students in Economics. On occassion, there will also be students from the UK College of Pharmacy or the Martin School of Public Policy and Administration.

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Download the full syllabus.

Working paper on Massachusetts health reform - January 11, 2015
2015-01-11 Aaron Yelowitz Media

Health Insurance, Fertility, and the Wantedness of Pregnancies: Evidence from Massachusetts

Along with Maria Apostolova-Mihaylova, we have a new working paper on the impact of Massachusetts health reform on fertility.

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Health insurance reform in Massachusetts lowered the financial cost of both pregnancy (by increased coverage of pregnancy-related medical events) and pregnancy prevention (by increasing access to reliable contraception and family planning). We examine fertility responses for women of childbearing age in Massachusetts and, on net, find no effect from increasing health insurance coverage. This finding, however, masks substantial heterogeneity. For married women aged 20 to 34 - who have high latent fertility and for whom pregnancies are typically wanted - fertility increased by approximately 1 percent. For unmarried women in the same age range - for whom pregnancies are typically unwanted - fertility declined by 9 percent. Fertility rates changed very little for other groups, in part because of low latent fertility or minimal gains in insurance coverage. Pregnancy wantedness increased in the aggregate through a combination of increasing wanted births and decreasing unwanted births.

Download the working paper.

My first Op-Ed - January 7, 2015
2015-01-07 Aaron Yelowitz Media

Before economics, my passion was the Pittsburgh Steelers.

Over the Christmas break, I celebrated the 35-year anniversary of my first Op-Ed, published in the San Jose Mercury News.

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Official's error upsets 10-year-old

I am disgusted with the call Monday night, Dec. 10, against the Pittsburgh Steelers, who had the momentum going for them for the first time in the game (a 20-17 loss to Houston). The official who called the play should be fired. He knew it would be an onside kick, and was right on top of the play.

OK, the Steelers might not have scored and tied or won the game. But that was the worst call I've ever seen. I'm glad it was on national TV because you'll get a lot more letters complaining.

Aaron Yelowitz, 10, Sunnyvale

Download the original Op-Ed and see the boxscore.

Professors talk minimum wage - December 11, 2014
2014-12-11 Aaron Yelowitz Media

Kentucky Kernel: Professors talk minimum wage

Contributing columnist Cheyene Miller of the Kentucky Kernel discusses minimum wage issues in Louisville in Professors talk minimum wage.

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According to associate economics professor Aaron Yelowitz, a minimum wage hike isn't necessarily the most effective way to boost a city's economy.

The economist recently spoke before the Louisville Metro Council's labor and economic development committee and explained why a proposed citywide minimum wage increase to $10.10 per hour would do more harm than good to the economy.

According to Louisville Business First, the next committee meeting concerning the minimum wage increase is scheduled for Monday.

Greater Louisville Inc. and about 20 more businesses have opposed the measure, according to Business First. Yelowitz said that citywide minimum wage increases cause both employers and customers to pursue cheaper business across city and even state lines. This problem is particularly true for Louisville, since it rests on the border of Indiana.

"Citywide minimum wages are fundamentally different from federal or statewide minimum wages because of the ability of business to move across city borders," said Yelowitz. "Business movement, which is something you likely wouldn't see all that much of with a statewide or obviously federal minimum wage, becomes a far bigger deal in a place like Louisville."

Yelowitz added that a city with a relatively low cost of living, like Louisville or Lexington, would not receive the same benefits of a minimum wage increase as a larger city.

For example, a city like San Francisco with a $10.74 minimum wage makes more sense because the cost of living there is already high.

According to Yelowitz, who has performed extensive research on the economic effects of citywide minimum wage increases, unemployment and job loss increase when minimum wage increases. He studied these effects in Santa Fe, N.M., where a citywide minimum wage increase led to a 3.2 percent increase in unemployment, according to his research.

With regard to Lexington, Yelowitz said that there are certain differences in the economic structures of the two cities that should be taken into consideration - namely, the potential for Indiana's economics to affect Louisville.

University of Massachusetts Amherst economics professor Jeannette Wicks-Lim testified to the council via Skype video. She spoke in support of a minimum wage increase and countered some of Yelowitz's research findings.

"The situation in Santa Fe is quite different than the situation in Louisville," Wicks-Lim said to the council. "If you look at the size of Santa Fe relative to Louisville, Santa Fe is one-tenth the size of Louisville when you're talking about area. So you're actually talking about a small city embedded within a larger economy."

Wicks-Lim added that Santa Fe's minimum wage increase did lead to a shortage in hours for employees, but said employees still ultimately made more money due to the higher wage. She also said that the proposed increase to $10.10 per hour in Louisville was reasonable and that a gross negative impact on the city's economy is not likely.

According to an earlier report from the Business First, a vote to increase the Louisville minimum wage had been temporarily postponed as councilman Ken Fleming pushed for an audit of the increase's financial impact on the city.

Download the Kentucky Kernel article.

Louisville Minimum Wage (Pt 2) - December 3, 2014
2014-12-03 Aaron Yelowitz Media

Courier Journal: Minimum wage pro and con

Metro Council Member Marilyn Parker cites my work on Santa Fe in her letter to the Courier Journal.

Read more →

Dr. Aaron Yelowitz's study titled "How did the $8.50 Citywide Minimum Wage Affect the Santa Fe Labor Market?" found the minimum wage increase led to an 8.3 percent increase in unemployment for low-skilled workers. The Santa Fe minimum wage increase only applied to companies of 25 employees or more. The Louisville minimum wage ordinance does not contain this exemption, and would translate into an even bigger percentage of job losses in Louisville since it applies to small locally owned business with any number of workers as well.

Download the Courier-Journal article.

Louisville Minimum Wage - December 3, 2014
2014-12-03 Aaron Yelowitz Media

UK Economist to Louisville: 'No' on Minimum Wage Hike

Carl Nathe, at UK, has an excellent write-up on the issues surrounding the Louisville minimum wage at UK Now.

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LEXINGTON, Ky. (Dec. 3, 2014) - A University of Kentucky economist has told the Louisville Metro Government that a proposed citywide minimum wage actually could have a negative impact on employment.

Aaron Yelowitz, associate professor and director of graduate studies in economics in UK's Gatton College of Business and Economics, citing economic research he has done on citywide minimum wages in Santa Fe, New Mexico and San Francisco, California, said, "There is consistent and compelling evidence that raising the citywide minimum wage increases unemployment and harms the labor market."

Yelowitz, testifying recently before a Louisville Metro Council committee studying the issue, added, "The concerns about businesses relocating and unemployment rising are amplified in Louisville. And if your goal is to improve the lives of working families, a citywide minimum wage doesn't solve that problem."

The committee is scheduled to meet Thursday, Dec. 4, to decide whether to recommend bringing the proposed ordinance before the full council on Dec. 11 for a vote.

Citywide minimum wage ordinances are uncommon across the U.S., and Yelowitz said there is a good reason for that.

"The answer is that some businesses can escape the minimum wage by moving outside of city lines," said Yelowitz. "Even if businesses don't relocate, customers do, by shopping elsewhere. If people can do their shopping outside of city lines, it restricts the ability of businesses to pass along the higher labor costs of the minimum wage through higher consumer prices. In turn, that means businesses adjust in other ways -- such as cutting hours, laying off workers, or not hiring when someone leaves -- in order to maintain their bottom line."

According to Yelowitz, if Louisville raised its minimum wage from the current $7.25 to ultimately $10.10 per hour, a 39 percent increase, the main avenue of adjustment by businesses would be through the labor market rather than through consumer prices. Another factor is the relatively low cost of living in Louisville as compared with many other cities. Hiking the minimum wage in San Francisco to $10.74 per hour is not that dramatic because the cost of living is so high. Raising it to $10.10 per hour in Louisville has a real effect on a businesses' operating costs. In addition, areas surrounding Louisville, including southern Indiana and the rest of Kentucky, have the federal minimum wage of $7.25 per hour.

"The final issue to consider is whether minimum wages improve the lives of working families," said Yelowitz. "The answer is 'no.' In an analysis of Kentucky, I found two important things that relate to the discussion in Louisville. First, just 12 percent of low earners are single earners with children. The largest group, 28 percent, lives with parents or relatives. Poverty among the working poor is about hours of work, not wages.

"Full-time, full-year work leads to greater reductions in poverty than raising the minimum wage, said Yelowitz. "It is about hours, not about wages."

Yelowitz concluded his testimony on the Louisville minimum wage issue by saying, "Based on all of the evidence, enacting a minimum wage in Louisville would do more harm than good."

A video of Yelowitz' testimony before the Louisville Metro Council can be accessed here http://www.cato.org/multimedia/media-highlights-tv/aaron-yelowitz-testifies-proposed-minimum-wage-ordinance-louisville.

More on Yelowitz' analysis can be found here http://www.economics21.org/commentary/citywide-minimum-wage-hikes-do-more-harm-good.

Congressman John Yarmuth (D-Louisville) disagrees with Yelowitz on the issue as evidenced by this recent Louisville Courier-Journal article http://www.courier-journal.com/story/news/politics/metro-government/2014/10/30/john-yarmuth-encourages-metro-council-increase-minimum-wage-locally/18205179/.

Download the UK Now article or the Screenshot.

Jim Poterba - November 2014
2014-11-15 Aaron Yelowitz Media

Jim Poterba - my advisor at MIT - was awarded the Daniel M. Holland Medal from the National Tax Association. Congratulations Jim!

MediaPost Coverage of Bitcoin - November 10, 2014
2014-11-10 Aaron Yelowitz Media

Google Trend Data Identifies Individuals With Interest In Bitcoin

Laurie Sullivan of MediaPost has written an extensive article of my Bitcoin study with Matthew Wilson.

Read more →

Download the Mediapost article or our Bitcoin Study.

Health Reform and Fertility - November 9, 2014
2014-11-09 Aaron Yelowitz Media

Health Insurance, Fertility, and the Wantedness of Pregnancies

This past Friday, I presented "Health Insurance, Fertility, and the Wantedness of Pregnancies: Evidence from Massachusetts" (with M. Apostolova) at University of Cincinnati. The abstract follows below the fold.

Read more →

Health insurance reform in Massachusetts lowered the cost of pregnancy and the cost of preventing pregnancy (through increased access to reliable contraception). We examine fertility responses for women of childbearing age, and on net, find no effect of increasing health insurance coverage. This masks substantial heterogeneity, however. For married women aged 20-34 - who have high latent fertility and for whom pregnancies are typically wanted - fertility increased by approximately 1 percent. For unmarried women in the same age range - for whom pregnancies are typically unwanted - fertility declined by 9 percent. For other age/marital status groups, there was very little fertility response, in part because of low latent fertility or minimal gains in insurance coverage. Pregnancy wantedness increased in the aggregate through a combination of increasing wanted births and decreasing unwanted births

Download the study or the seminar announcement.

CyrptoCoinsNews Coverage of Bitcoin - November 6, 2014
2014-11-06 Aaron Yelowitz Media

Professor Analyzes Characteristics of Bitcoin Users With Google Trends

Carter Graydon of CryptoCoinsNews has written a careful summary of my Bitcoin study with Matthew Wilson.

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Dr. Aaron Yelowitz, an associate Professor and Director of Graduate Studies in the Department of Economics at the University of Kentucky, has released a paper analyzing Bitcoin and its users with search trends using Google Trends.

As Kristoufek demonstrated in his paper, there is a strong, positive correlation between Bitcoin searches and exchange prices. Yelowitz and Mathew Wilson takes things a step further and finds correlations between users and interest in Bitcoin. Based on "anecdotal evidence" in regards to Bitcoin users, Yelowitz constructed proxies for four possible users: computer programmers, speculative investors, Libertarians and criminals.

Yelowitz admits that some of these correlations are inherently difficult to measure, due to the sensitivity of the activity. Their findings show computer programming and illegal activity search terms are positively correlated with Bitcoin interest, while Libertarian and investment terms are not.

How It Was Done

Google Trends allows users to extract data on both precise search terms and general topics. For instance, the topic "Bitcoin (currency)" includes the terms "Bitcoin", "Bitcoins", "Bitcoin Mining", "Bit Coin", "Bitcoin exchange", "Bitcoin price" and "Bitcoin value". Using this information and following Stephens-Davidowitz work, the new study came up with a formula after normalized each search rate to its z-score.

Using their formula they found that computer science and Silk Road are both positively associated with interest in Bitcoin. As unemployment rates went up there was no change in interest amount the computer programmers and those performing in illegal activity, but there was evidence to support Libertarian activity that drove interest to Bitcoin. Higher unemployment rates were negatively associated with Bitcoin interest.

Conclusion

Dr. Yelowitz paper concludes that computer programming enthusiast and illegal activity drive interest in Bitcoin while there is little to no support for political and investment motives. What do you think your Google search terms say about you as a Bitcoiner? Comment below!

Download the CryptoCoinsNews article or our Bitcoin Study.

CoinDesk Coverage of Bitcoin - November 5, 2014
2014-11-05 Aaron Yelowitz Media

Google Search Study Hints at Shady Truth of Bitcoin Users

Nermin Hajdarbegovic of CoinDesk has written a summary of my Google trends study with Matthew Wilson.

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In our study, we find that searches on the term 'Silk Road' is positively correlated with Bitcoin interest. As we outline in our study (and in the CoinDesk article), there are many caveats, but that's what we find.

Download the CoinDesk article or our Bitcoin Study.

Louisville Minimum Wage - November 3, 2014
2014-11-03 Aaron Yelowitz Media

Responses to Louisville Metro Council

On October 30, 2014, I testified about the Louisville minimum wage ordinance in front of the Metro Council. There were several questions that I promised I'd answer through written correspondence. They're attached here, below the fold.

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Bitcoin Study - November 3, 2014
2014-11-03 Aaron Yelowitz Media

Characteristics of Bitcoin Users: An Analysis of Google Search Data

I have a new paper (along with Matthew Wilson) that analyzes interest in Bitcoin. The abstract follows.

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The anonymity of Bitcoin prevents analysis of its users. We collect Google Trends data to examine determinants of interest in Bitcoin. Based on anecdotal evidence regarding Bitcoin users, we construct proxies for four possible clientele: computer programming enthusiasts, speculative investors, Libertarians, and criminals. Computer programming and illegal activity search terms are positively correlated with Bitcoin interest, while Libertarian and investment terms are not.

Download the study.

Yarmuth pushes council - October 30, 2014
2014-10-30 Aaron Yelowitz Media

Discussion of Louisville Minimum wage

From The Courier-Journal's write-up "Yarmuth pushes council to act on minimum wage" on Oct. 30, 2014.

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Economics professor Aaron Yelowitz of the University of Kentucky, who has studied the minimum wage for 10 years, said he studied Santa Fe and San Francisco and a local minimum wage can increase unemployment and hurt the local market.

"Enacting a minimum wage in Louisville will do more harm than good," Yelowitz said.

Download the news article.

Louisville Minimum Wage - October 30, 2014
2014-10-30 Aaron Yelowitz Media

Aaron Yelowitz Louisville Testimony

Today I had the opportunity to testify about the likely impacts of Louisville's minimum wage ordinance. My part starts around 50 minutes into the meeting. See link from Louisville Metro Government Labor & Economic Development Committee on Oct. 30, 2014, chaired by Councilman David Tandy. Download my testimony. See also e21 - Economic Policies for the 21st Century.

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Gaming the Health Care Exchanges? - October 2014
2014-10-09 Aaron Yelowitz Media

Testing Feldstein's Fatal Flaw Hypothesis

Back in 2013, Dr. Marty Feldstein, one of the most prolific economists in the profession wrote about a potentially fatal flaw in the Patient Protection and Affordable Care Act. His key point was that the combination of community rated premiums, guaranteed issue, and modest penalties for non-purchase could induce individuals to delay purchase health insurance until they get sick.

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Feldstein's point is related to the idea of "conditional coverage" - an individual might implicitly have health insurance coverage protection even if he or she doesn't take the steps to purchase it before a bad health event, because the barriers to enrollment are low. This is true after the implementation of the PPACA, and has been true for Medicaid for a long time. In a pathbreaking article in Quarterly Journal of Economics in 1996, Dr. David Cutler and Dr. Jonathan Gruber call this "conditional coverage".

In a forthcoming paper with Dr. Jim Marton, we examine this issue in the context of Kentucky's Medicaid managed care program. Our abstract follows.

This paper estimates the impact of the introduction of Medicaid managed care (MMC) on the formal Medicaid participation of children. We employ a quasi-experimental approach exploiting the location-specific timing of MMC implementation in Kentucky. Using data from the March Current Population Survey from 1995-2003, our findings suggest that the introduction of MMC increases the likelihood of being uninsured and decreases formal Medicaid participation. This finding is consistent with an increase in "conditional coverage" - waiting until medical care is needed to sign up or re-enroll in Medicaid. These effects are concentrated among low-income children and absent for high-income children. We find no evidence of "crowd-in" - substituting private coverage for Medicaid. These results are robust to multiple placebo tests and imply the potential for less formal participation (i.e. more conditional coverage) among the ACA Medicaid expansion population (which is likely to be primarily covered under MMC) than is typically predicted.

Louisville Minimum Wage - October 2014
2014-10-03 Aaron Yelowitz Media

Dr. Paul Coomes Testimony

The distinguished economist, Dr. Paul Coomes, Emeritus Professor of Economics at the University of Louisville, recently spoke to the Louisville City Council about Louisville's proposed minimum wage ordinance. He discusses my work on minimum wages and poverty in Kentucky, as well my work on Santa Fe's minimum wage ordinance.

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University of Kentucky Economics PhD - September 2014
2014-09-30 Aaron Yelowitz Media

Overview of the PhD program

Since 2012, I have served as Director of Graduate Studies for the Economics Ph.D. program at University of Kentucky. As applications start to come in, I'd like to overview our program below.

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As a brief overview, students in our Ph.D. program study with faculty who are experts in their fields, interact with other bright and capable students and obtain a vast amount of knowledge of their fields of interest. Our Ph.D. program is designed so the motivated student can make steady progress toward the Ph.D. degree. The first year focuses on core theory: microeconomic theory, macroeconomic theory, mathematical methods and econometrics. Students demonstrate their proficiency in micro and macro economics through comprehensive exams taken during the beginning of summer after their first year. Second year coursework completes core theory and begins advanced seminar courses in specific field areas: Macroeconomics, Industrial Organization, Public, Labor, International or Health/Environmental. At this time students begin exploring dissertation topics through classroom assignments. Students demonstrate their mastery of field areas by completing a comprehensive examination in a chosen field. Third year coursework completes classes in additional topic areas and begins independent study toward a dissertation. Students complete a research proposal, and defend the proposal through an oral examination. During the fourth and fifth years students complete their dissertation research.

We take great pride in mentoring our students through the job search process as they are completing our Ph.D. program, and have had success in placing students in rewarding careers. Recent graduates from our program have been placed in academic positions in both the US and abroad, and at a variety of positions in the public and private sector. Academic placements include: American University, Armstrong Atlantic University, Bloomsburg University, Brigham Young University, Bryant University, CSU Fresno, Canisius College, East Tennessee State University, Middle Tennessee State University, Nicholls State University, North Carolina A&T, Roanoke College, Saginaw Valley State University, Southwestern University of Finance and Economics (China), University of Mary Washington, University of Northern Florida, University of Southern Indiana, University of Texas, San Antonio, and Valdosta State. Non-academic placements include: Bureau of Economic Analysis, Economic Analysis Group, ERS Group, Institute for Defense Analyses, Kentucky LRC, PricewaterhouseCoopers and U.S. Census Bureau. A more extensive list is available at: Recent Placements

A longer description of our program can be found here: Economics PhD Program Overview

You can also learn about our admission requirements, and our PhD Degree Programs

You can also learn the answers to frequently asked questions about graduate programs in economics

Finally, when you are ready, go ahead and apply to the Ph.D. program.

Download the overview of UK's program.

Louisville Minimum Wage - September 2014
2014-09-24 Aaron Yelowitz Media

Proposed Citywide Minimum Wage in Louisville, KY

Recent news reports suggest that Louisville, KY might increase its citywide minimum wage to $10.10/hour.

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In work with my colleague, Ken Troske, we have simulated the effects of raising the minimum wage in Kentucky. From our abstract:

Many policymakers in Kentucky have suggested raising the state's minimum wage as a way to help poor families. In this report, we examine which Kentucky workers would be helped and hurt by a $7 minimum wage in Kentucky. The results indicate that both the poor families, which the minimum wage increase is intended to help, and the state as a whole would be, if anything, less well off if the wage was raised. We investigate the earned income tax credit as an alternate method of assisting poor families and find it to be less disruptive and more likely to assist the targeted recipients.

Download the full study.

Employer mandates - October 2004
2014-09-14 Aaron Yelowitz Media

Op-Ed on full effects of employer mandates.

From my Op-Ed "Free Lunch In Calif. Will Relegate Many to the Bread Lines" in Investor's Business Daily on Oct. 27, 2004

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Op-Ed: Free Lunch In Calif. Will Relegate Many to the Bread Lines

Published in the Investor's Business Daily, October 27, 2004

A ticking time bomb threatens to devastate the state of California. Powerful special interests watch impatiently as their plan nears fruition, while most everyone else goes about their business, unaware of the impending meltdown.

This isn't a Hollywood B-movie script. Proposition 72 is poised to blast a hole through California's economy.

If it passes on election day, Proposition 72 will force every California business with 20 or more employees to pay their employees' health insurance bill.

While this "free lunch" may sound attractive to many employees, my own recently published study of U.S. Census data indicates that Proposition 72 will cost employers more than $12 billion a year and destroy up to 150,000 jobs. For comparison, the 1994 earthquake that shook California's economy resulted in less than half that number of lost jobs.

The layoffs will be concentrated among the people who need their jobs the most: the poor and unskilled. High school dropouts comprise 17% of the California workforce, but my study shows that they will account for up to 40% of the jobs lost because of Proposition 72.

Minorities will also take a disproportionate hit. While Hispanics make up 30% of the workforce, they will bear 53% of the job losses.

In Los Angeles County, the mayor's office recently announced that nearly a third of working-age adults can't locate an intersection on a street map. Nearly half can't use a bus schedule. That's more than 3.8 million people in Los Angeles alone who desperately need training, including on-the-job training. But many businesses simply cannot afford ever-higher healthcare and labor costs for people who do not know how to read or make change.

Losing Coverage

No academic study can tell you exactly which 150,000 Californians will begin receiving unemployment checks in place of paychecks. It could be you. It could be a family member or neighbor. Proposition 72 is almost like a reverse lottery for the unlucky.

What economic research can tell you is that this referendum, intended to provide Californians with health insurance, will actually cost 32,000 people their existing coverage. They should have plenty of time to consider Proposition 72's bitter irony: Employer-provided health insurance is a hollow promise if you no longer have an employer.

As people lose jobs and payrolls shrink, the shockwaves from Proposition 72 will ripple through the entire economy. Meanwhile, the initiative won't even address the real problem.

Its backers concede that nearly 70% of the uninsured will remain without coverage. It turns out that only one third of the $12 billion price tag for Proposition 72 goes toward providing health insurance to those who don't have it. Nearly half the expense is for people who are already covered by employer-provided insurance.

Because the referendum requires employers to pay 80% of premiums, the thousands of businesses currently paying lower percentages will experience increased costs.

Under Proposition 72, poor Californians can receive a subsidy for their 20% share of health insurance premiums. That sounds like a good idea, until you realize that eligibility is based on employee wages rather than family income.

Distorted Data

Tens of thousands of people with family incomes over $100,000 will receive a subsidy intended for the poor.

Proposition 72 advocates failed to include the poverty subsidy in their cost projections. In fact, they have systematically and intentionally hidden its real price tag. Their estimates range from 10% to 22% of the actual $12 billion figure.

To arrive at these drastically understated numbers, advocates have engaged in statistical gamesmanship. For example, their number crunchers slashed the final cost tally by 40%, figuring that employers deduct healthcare expenses from their corporate taxes. This conveniently ignores the many employers who don't pay corporate income taxes, such as schools and non-profits.

In another statistical slight of hand, Proposition 72 supporters didn't count the cost to businesses of covering employees currently enrolled in Medicaid. But this didn't stop them from brazenly counting the cost shift as a pure "savings." To be sure, Medicaid is expensive. But it's important to remember that the federal government picks up half the bill for this Great Society program. In contrast, Californians will be responsible for the entire cost of coverage under Proposition 72.

Already on board against 72 is Governor Schwarzenegger. "Well-intentioned as it may be," he cautioned, "Proposition 72 will only reverse California's recovery and trigger an exodus of jobs from the state."

As this economic time-bomb ticks closer to disaster, every California voter has a rare opportunity to play hero.

Dr. Aaron Yelowitz, formerly an assistant professor at UCLA, is an associate professor at the University of Kentucky specializing in labor and health economics.

Download the Op-Ed and/or the full study.

Analysis of Massachusetts' health reform - January 2010
2014-08-28 Aaron Yelowitz Media

My analysis of RomneyCare.

From the Wall Street Journal's editorial page "RomneyCare Revisited - What Massachusetts voters knew about health reform." on Jan. 21, 2010

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"Using the Census Bureau's current population survey, University of Kentucky economist Aaron Yelowitz and Michael Cannon of the Cato Institute studied RomneyCare between 2005 and 2008 - that is, two years on either side of its passage. The share of uninsured residents did fall to 5.4% in 2008 from 9.8% in 2005 (though the authors argue this reduction is overstated).

But Messrs. Yelowitz and Cannon show that most of the new coverage was concentrated among people earning under 300% of the federal poverty level, or about $66,000 for a family of four. Those happen to be the same people who qualify for subsidies in the heavily regulated insurance 'connector,' the prototype for the 'exchanges' that Democrats were contemplating before Mr. Brown so rudely interrupted.

Coverage for adults in this group increased by 14.2 percentage points - which merely proves that 'universal' coverage isn't much of a problem if health care is cheap for consumers. But another way of thinking about it is that the subsidies amount to a taxpayer-funded insurance discount. The same increase in coverage might be achievable if health care were less expensive. But rather than deregulate and reform the private market to lower costs, Mr. Romney and Democrats defaulted to the same public transfer payments that define ObamaCare.

The program's costs have since exploded and compounded the Bay State's budget burdens, even though the feds pay a large share of RomneyCare's costs via Medicaid. One reason for this spending boom, say Messrs. Yelowitz and Cannon, is that subsidized coverage has tended to crowd out private insurance: Among adults eligible for subsidies, unsubsidized coverage fell by 6.2 percentage points even as overall coverage increased statewide and in neighboring New England. The authors also point out that the true costs are, conservatively, 57% higher than what the government spends if unfunded private sector mandates are included - or about $1 billion total in 2008."

Download the news article and/or the study.

Greedy Businesses? - May 2012
2014-08-28 Aaron Yelowitz Media

Discussion of high implicit tax rates for the working class.

From Eric Schulzke's "Greedy businesses and the living wage: popular policies, disputed outcomes" in the Deseret News on May 19, 2012

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The safety net is a bit tangled, however. Back in 1996, Aaron Yellowitz, an economist at the University of Kentucky, drew up a table assessing the total government benefits a poor single mother with one child could receive - including cash, food, housing and medical care. He then tracked the decline in benefits as her income rose.

Despite numerous changes to the system, Yellowitz said, the gist of his table holds true today: as work income goes up, government benefits sharply drop. Because benefits are cut as earnings rise, real net income remains stagnant between $10,000 and $20,000 annual earnings. Net income then actually drops when earned income climbs between $20,000 and $25,000. Jacobs calls it a steep implicit tax on the poor.

Setting aside the implicit tax problem, Yellowitz still sees the living wage as poorly targeted to help those most in need. 'We're taking from employers and giving to workers under the guise of the struggling single parent,' he said. 'That's part of the story but nowhere close to 100 percent of it.' Estimates vary, but most agree that roughly 35 percent of minimum-wage workers are teenagers.

'If the object is to improve the lives of the poor, increasing the EITC is a much more effective tool than living-wage laws,' Yellowitz said. 'Most economists agree that minimum wage is a blunt way of trying to achieve this goal,' Yellowitz said.

Download the news article and/or the implicit tax study and/or the famous table illustrating high tax rates including the Medicaid notch and the public housing notch.

Undercount of the Uninsured - January 2010
2014-08-28 Aaron Yelowitz Media

My analysis of misreporting of insurance status.

From David Hogberg's "Does Mass. Health Law Cover Fewer People Than Believed?" in Investor's Business Daily on Jan. 19, 2010

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But that overstates the newly insured by at least 45%, according to Michael Cannon, director of health policy studies at the libertarian Cato Institute.

'The official estimates overstate the health coverage gains in Massachusetts in part because residents are concealing their coverage status,' said Cannon, who co-authored a study with Aaron Yelowitz, an economics professor at the University of Kentucky.

'We find evidence that these imputations rose in Massachusetts, not just after the law passed but relative to other New England states,' said Cannon. 'Using those other states as controls, it shows that nonresponse to the health insurance question is growing in Massachusetts for some reason that is unique to the Bay State.'

Cannon and Yelowitz find that the uninsured rate could be closer to 5.1% vs. the official 3.8%.

Download the news article and/or the study.

Santa Fe Living Wage - July 2006
2014-08-28 Aaron Yelowitz Media

My discussion on CNBC's Street Signs hosted by Erin Burnett.

I debate the merits of Santa Fe's minimum wage ordinance with Santa Fe's mayor, David Coss.

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Young Adults - May 2008
2014-08-28 Aaron Yelowitz Media

My analysis of young adults leaving the nest.

From Sue Shellenbarger's article "When 20-somethings Move Back Home, It Isn't All Bad" in the Wall Street Journal on May 21, 2008

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"The proportion of 18- to 34-year-olds living with their parents has risen by an estimated five percentage points since 1980, to roughly 34%, says Aaron Yelowitz, an associate professor of economics at the University of Kentucky and a contributor to the collection of studies 'The Price of Independence,' published by the Russell Sage Foundation."

Download the news article and/or the study.

Analysis of Employer Mandate on Kentucky - March 2012
2014-08-28 Aaron Yelowitz Media

My analysis of the ACA's employer mandate on Kentucky.

From Dan Dickson's article "UK Economists: Kentucky Climbing out of Recession" in Business Lexington on Mar. 2, 2012

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"Another portion of the economic conference dealt with how the federal Affordable Care Act's employer mandate will impact Kentucky businesses.

Effective January 1, 2014 the act requires large businesses (50 or more employees) to either provide affordable health insurance to full-time employees, but not their dependents, or pay a $2,000 per employee tax penalty. It's also known as 'Pay or Play'

'More than 283,000 Kentucky workers are likely to be affected by the mandate. Put differently, around 22 percent of workers at large firms would be impacted,' estimated Dr. Aaron Yelowitz, another UK Gatton College of Business and Economics professor.

In Central Kentucky, about 11.9 percent of full-time workers will be affected by the mandate.

Relative to the now well-known individual health care mandate, Yelowitz says there's been much less discussion about the Act's impact on larger businesses. Politically, opponents call it 'a job and wage killer.' The White House defends it, saying it is a 'shared responsibility fee' and that taxpayers are 'supporting the cost of health insurance for workers through premium tax credits for middle to low income families.'

Industries with large firms and many full-time workers who lack health insurance will be most impacted. The industries expected to be most affected in Kentucky are administrative and support, waste management and remediation services, followed by various types of manufacturing firms and then mining.

Large employers can provide health care insurance themselves or put employees into insurance exchanges (subsidized insurance). It might modify employment. Employers may decide to reduce the number of full-time workers to less than 50 to skirt the rules or may cut an employee's hours to less than 30 in a week.

Yelowitz says there could be some job losses if the new health care rules cause a company's profits to shrink. 'It may raise the cost of doing business to some extent in some industries and in all Kentucky regions,' noted Yelowitz, who added that employers in southeastern Kentucky, where there are fewer large companies, may feel the impact the most."

Download the news article and/or the study.

Kentucky's Health Care Exchange - December 2012
2014-08-28 Aaron Yelowitz Media

Discussion of Kentucky's exchange.

From Cheryl Truman's article "What to expect from Kentucky's health care exchange" in the Lexington Herald Leader on Dec. 17, 2012

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Aaron Yelowitz, an associate professor of economics at the University of Kentucky, said several variables could affect how many Kentuckians wind up in the exchange. That could make the state's projected numbers even higher, including employers who offer health insurance but plan to shift to the exchange, employers who never offered health insurance and will be going into the exchange, and individuals who are picking up new coverage.

Using a rough estimate, Yelowitz said that if 20 percent of Kentucky's population of about 4 million people lacked health insurance, there are 800,000 prospective clients for the exchange pool.

The health of those coming into the exchange also will bear study, he said, because those coming into the exchange might have more health problems than those who have employer-sponsored insurance.

'It will be hard to know how big of a deal this really is until some time has passed,' Yelowitz said. 'If some companies are gearing up to change their behavior, we may see that change early on.'

Download the news article.

California's Pay-or-play mandate - October 2003
2014-08-28 Aaron Yelowitz Media

Discussion of my analysis of California

From Craig Garthwaite's article "Davis' Bid To Stay In Office Will Cost Jobs In California" in Investor's Business Daily on Oct. 7, 2003

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The consequences of this new law are presented in a report on its impact by Dr. Aaron Yelowitz, a nationally respected labor and health economist formerly at UCLA and now at the University of Kentucky and the National Bureau of Economic Research.

Taking The Hit

This research shows the "how" and "why" employees will suffer from this law as employers adjust to this new costly mandate by lowering wages, cutting benefits and laying off workers.

Yelowitz's research confirms what scores of other studies have found: Government-mandated increases in wages and benefits often trigger the law of unintended consequences.

According to professor Yelowitz, hardest hit will be the over half-million employees who earn the state minimum wage or just above it.

These vulnerable employees risk losing their jobs either through labor force cuts as employers downsize to cut costs, or through competition as employers hire more experienced employees to justify increased hourly wages.

Despite these significant economic and human costs, nearly 4.5 million people - two-thirds of the uninsured - will remain without coverage under this new mandate.

Yelowitz estimates the cost of this new mandate to be significantly higher than its supporters admit.

Download the news article and/or the study.

Analysis of ACA on Young Adults - November 2009
2014-08-28 Aaron Yelowitz Media

My analysis of the ACA's individual mandate.

From Kyle Wingfield's article "Democrats will soak the young" in the Atlanta Journal-Constitution on Nov. 11, 2009

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A University of Kentucky economist, Aaron Yelowitz, studied the impact these new requirements would have for younger adults versus their elders in a new paper for the Cato Institute.

He concluded that the three provisions 'would drive [health insurance] premiums down for 55-year-olds but would drive them up for 25-year-olds - who are then implicitly subsidizing older adults.'

The culprit is the community rating, an aspect of Democrats' plans that doesn't get nearly as much attention as the mandate or guaranteed issue.

Yelowitz looked at premiums in New York, which already has community rating, versus California, which doesn't. On the Web site eHealthInsurance.com, he found that 25-year-olds in Bell Gardens, Calif., can choose from 107 health plans. The premiums they pay are one-fourth to one-third of what 55-year-olds in the Los Angeles suburb can expect.

Download the news article and/or the study.

Santa Fe Living Wage - October 2005
2014-08-28 Aaron Yelowitz Media

My analysis of Santa Fe's minimum wage.

From the Santa Fe Reporter's article "The Earn Burn" on Oct. 19, 2005

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"When it comes to numbers, however, it's Aaron Yelowitz, the hotshot 36-year-old economist with MIT credentials and a University of Kentucky assistant professorship under his belt, who is the Chamber's most important ally.

Yelowitz met former Chamber president Jerry Easley in Washington, DC at a US Chamber of Commerce convention in 2004. At Easley's request, Yelowitz traveled to testify on behalf of New Mexicans for Free Enterprise when the living wage first went to court later that year.

Yelowitz' latest study says the living wage in Santa Fe isn't working. Funded by the Economic Policy Institute, a Washington, DC think tank, and released in September, Yelowitz' report concludes the living wage has significantly increased unemployment in Santa Fe between June of 2004 and 2005 by approximately 3.2 percent. The increase, Yelowitz says, unduly affected locals with fewer than 12 years of education.

Living wage defenders scoff that Yelowitz' data is skewed and the timing of the study suspicious, given its release just prior to Albuquerque's failed attempt at a living wage on Oct. 4 (both are claims denied by Yelowitz).

Download the news article and/or the study.

Reaction to Supreme Court Ruling - June 2012
2014-08-28 Aaron Yelowitz Media

My analysis of the impact of the ruling on the individual mandate.

From Alex Forkner's article "Reactions to health care ruling mixed, state prepares to move ahead on provisions" on Jun. 28, 2012

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"Aaron Yelowitz, associate professor of economics in the Gatton College of Business at the University of Kentucky, said the Supreme Court's decision will certainly be felt throughout the bluegrass state.

'Basically, today's ruling shores up the financial solvency of that arrangement, where people can purchase health insurance whether or not they're sick, but it comes at a real cost,' he said. 'There are provisions that weren't talked about today, like employer mandates, which essentially say that if you're a firm with 50 or more employees you have to provide health insurance to your employees, which will almost certainly raise labor costs. I've actually done some back-of-the-envelope calculations on how many workers will be affected by those sorts of permissions in the healthcare reform law, and the answer is around a quarter of a million Kentuckians.'

Yelowitz described the individual mandate, the part of the law requiring most Americans to buy health insurance, as a 'hidden tax.' Most people who choose to forgo buying health insurance tend to be young and healthy, he said. According to the Associated Press, approximately 640,000 Kentuckians are currently uninsured. Under the Affordable Care Act, those individuals must purchase healthcare or face a penalty.

'The mathematics behind it then would be that you have young people purchasing plans that are actually priced above their risk,' Yelowitz said. That extra cost will go toward lowering premiums for people with pre-existing conditions.

'So the big winners out of a policy like that tend to be people that are sick,' Yelowitz said. 'Remember that a key feature of healthcare reform was, regardless of whether your sick or not, you'll still be able to purchase healthcare at affordable prices. But the way which it is done, essentially, is on the backs of people who aren't sick and before were not purchasing health insurance, and that's where the individual mandate comes in.'"

Download the news article.

Missouri Minimum Wage - October 2006
2014-08-28 Aaron Yelowitz Media

My analysis of the Missouri minimum wage.

From David Nicklaus' article "Opinion: Common ground on the minimum-wage debate" in Southeast Missourian on Oct. 13, 2006

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"The average low-wage worker, in fact, lives in a household with an income of $57,000 a year. The study, written by economists Kenneth Troske and Aaron Yelowitz of the University of Kentucky, points out that poverty is a problem of too few hours worked, not low wages. The average poor worker earns $9.58 an hour, but works 40 percent fewer hours than a typical adult.

Raising the minimum wage would cause employers to cut hours even more. That's the law of demand, the most basic of economic principles: If you raise the price of something (labor in this case), people buy less of it.

Troske and Yelowitz aren't just naysayers. If Missouri is serious about fighting poverty, they propose, it should adopt a state version of the earned income tax credit. Illinois and 13 other states already piggyback on a federal credit given to families who earn less than $36,348 annually.

By raising take-home pay, the credit increases the incentive to work. And, Troske and Yelowitz write, 'instead of providing a wage subsidy for relatively wealthy teen-agers, the EITC is directly targeted at workers in poor households.'

Download the news article and/or the study.

Op Ed on ObamaCare and Young Adults - November 2009
2014-08-28 Aaron Yelowitz Media

My analysis of how the ACA will affect young adults.

Op Ed in New York Daily News "Why would Congress compel young adults to buy health insurance they don't need?" on Nov. 7, 2009

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Download the Op Ed and/or the Cato study.

Kentucky's Obesity Epidemic - September 2012
2014-08-28 Aaron Yelowitz Media

Some insights on obesity in Kentucky.

From Cheryl Truman's "Recent report on Ky.'s obese future has experts seeking solutions -New obesity predictions should disturb us all" in the Lexington Herald Leader on Sep. 24, 2012

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"Aaron Yelowitz, an associate professor of economics at the University of Kentucky, said that if Kentucky continues to get fatter at the same rate as other states with which it is competing, that doesn't necessarily handicap the state competitively. All other states, even those that had until recently prided themselves on a thin population, are gaining weight, he said."

Download the news article.

Low Wage Workers in Bay Area - March 2013
2014-08-28 Aaron Yelowitz Media

My ACS analysis of low wage workers in the Bay Area.

From Patrick May's article "Bay Area's lowest-paid workers struggle to get by as debate rages over minimum-wage hikes" on Mar. 22, 2013

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"Getting a handle on the size of this under-the-radar community is tough. One rough estimate by University of Kentucky economist Aaron Yelowitz, who crunched numbers from the U.S. Census 2011 American Community Survey, was that of the 3,513,358 people working in the Bay Area, 12 percent -- or 421,602 -- are paid $8 or less an hour, which is legal for certain exempted employees."

Download the news article.

Public Housing and Labor Supply - November 2001
2014-08-27 Aaron Yelowitz Media

My analysis of public housing and labor supply.

In a working paper, I analyze the effects of the public housing system on labor supply. An abstract follows:

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Approximately 20 percent of female headed households with children receive government-subsidized housing. For those who receive housing subsidies, the subsidies are often worth more than all other welfare benefits combined. Despite its value and prevalence, there is comparatively little empirical evidence on how public housing in the United States affects economic behavior.

This study uses data from the SIPP and CPS to explore how public housing rules affect the work behavior of female headed households. The public housing rules create a great deal of variation in the program generosity, through three different dimensions. First, the program generosity varies by metropolitan area. Second, it varies over time, through year-to-year changes in the subsidy and income eligibility limit. Third, unlike other welfare programs, the benefits vary based on the sex composition of the children. For example, a family with one boy and one girl gets a three-bedroom apartment or voucher, while a family with two boys or two girls gets a two-bedroom apartment or voucher. By combining these different sources of variation, this study is better able to control for fixed geographic differences (such as the degree of rationing by the public housing authority), a limitation in several previous studies.

The results indicate that the public housing rules induce labor supply distortions in both data sets, though the evidence on other outcomes such as AFDC participation is less conclusive in the annual CPS data than in the monthly SIPP data. Among female headed households, a one-standard deviation increase in the subsidy reduces labor force participation by 3.6-4.2 percentage points from a baseline participation rate of 70-75 percent.

JEL Classification: H53, I38, J22, R21

Download Public Housing and Labor Supply.

California's Employer Mandate - October 2006
2014-08-27 Aaron Yelowitz Media

My analysis of California's pay-or-play employer mandate.

From Central Valley Business Times' "Report: Forcing employers to provide health insurance doesn't work" on Oct. 20, 2006

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"But California's 2003 pay-or-play law was probably not the way to go, according to the report's author, Aaron Yelowitz, an associate professor of economics at the University of Kentucky.

'Because private coverage plays such an important role in overall insurance rates, you can understand the logic behind the pay-or-play concept,' says Mr. Yelowitz. 'States just need to make sure that mandates are structured to avoid unintended and damaging pitfalls.'"

Download the news article and/or the study.

Impact of Citywide Minimum Wages - December 2012
2014-08-27 Aaron Yelowitz Media

My analysis of San Francisco's minimum wage and sick leave mandate.

From Dan Schreiber's "San Francisco's minimum wage will rise again to $10.55" in the San Francisco Examiner on Dec. 31, 2012

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"But a Washington, D.C., economic think tank funded by a restaurant and beverage industry lobbyist is pointing to a more recent University of Kentucky study showing that minimum wage laws like San Francisco's contribute to a lack of jobs for young workers.

The study by economist Aaron Yelowitz concludes that earlier studies failed to recognize groups who are losing out on work opportunities because of the higher labor cost - specifically teenagers. Yelowitz also incorporates The City's mandatory sick leave and health care policies, which contribute to an actual 'compensation floor' of nearly $13 per hour in San Francisco.

The study concluded that for each $1 increase in floor compensation, the unemployment rate among younger workers increases by 4.5 percent.

'The results present a cautionary tale for cities that are considering intervening in the labor market: although well-intentioned, forcing firms to pay higher wages and other compensation harms precisely those workers that the laws are intended to help,' Yelowitz wrote."

Download the news article and/or the study.

Impact of Employer Mandate on Kentucky - February 2012
2014-08-27 Aaron Yelowitz Media

My analysis of the impact of the ACA employer mandate on Kentucky.

From Cheryl Truman's "Kentucky economy's recovery will be a slow climb, expert says" in the Lexington Herald Leader on Feb. 1, 2012

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"Aaron Yelowitz, an economics professor in the business college, told attendees that another concern for Kentucky is the effect of the Affordable Care Act in 2014. The federal law will require businesses with 50 or more employees to provide "affordable" insurance to full-time workers or pay a tax penalty of $2,000 for each employee.

Using a detailed econometric model, Yelowitz estimated that 283,549 of 2.4 million Kentucky workers could be affected. Analyzing by industry, Yelowitz estimated that workers in the administrative, waste management, manufacturing, mining and transportation sectors might be most affected.

The region most likely to be affected is in southeastern Kentucky, although all areas of the state would have a number of businesses that will need to respond to the health care mandate."

Download the news article and/or the study.

Supreme Court ruling - June 2012
2014-08-17 Aaron Yelowitz Media

See some of my initial reactions to the Supreme Court's ruling on the individual mandate.

Health care reform and young adults - November 2009
2014-08-17 Aaron Yelowitz Media

My discussion with Caleb Brown of Cato on how Obamacare would affect young adults.

Should Congress Mandate Coverage? - June 2009
2014-08-17 Aaron Yelowitz Media

My discussion on employer mandates at Cato Institute conference in Wasington DC.

Employer health insurance mandates - April 2009
2014-08-17 Aaron Yelowitz Media

My discussion with Caleb Brown on employer mandates.

Welcome to my website!
2014-08-16 Aaron Yelowitz Welcome

Thanks for visiting my website.

After years of procrastination, I've finally redesigned my website. The purpose is to better communicate about the economic issues that my research focuses on. On this news feed, I'll try to pass along a number of things that might be of interest.

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I'll post links on news stories that I've been asked to comment on. Also, I'll provide access to my unpublished working papers and data from my published studies. Finally, I'll provide some content from my graduate and undergraduate courses and perspective on Ph.D. programs through the lens of DGS.

vita
Education
8/1990-5/1994
Ph.D., Economics
Massachusetts Institute of Technology

Dissertation advisors: James Poterba and Jonathan Gruber

9/1987-6/1990
B.A., Business Economics
University of California, Santa Barbara

Graduated with High Honors

Experience
7/2001-present
Associate Professor of Economics
University of Kentucky

Taught classes in public finance (graduate and undergraduate level), health economics (graduate and undergraduate level), real estate economics (undergraduate level), labor economics (undergraduate level), and intermediate microeconomics (undergraduate level).

2008-present
Adjunct Scholar
Cato Institute

See my profile

7/1994-6/2001
Assistant Professor of Economics
University of California, Los Angeles

Taught classes in public finance (graduate and undergraduate level).

Other Links
Skills
Health Economics
Public Finance
Minimum Wages and Living Wages
Health Insurance Mandates
Welfare Programs
Transfer Programs and Poverty
Real Estate Economics
contact
Contact info
  • Name: Aaron Yelowitz
  • Address: University of Kentucky, Department of Economics, Gatton School of Business and Economics, Lexington KY, 40506-0034
  • E-mail: aaron@uky.edu
  • Phone: 859-257-7634