Book Description

"The three essays in this dissertation focus on the impacts of work incentives geared towards two very different segments of the labor market. The first essay, "Does Incentive Pay Alter Physician Effort? An Analysis of the Time and Treatment that Physicians Provide to Patients," examines the link between incentive pay and effort among a group of highly-skilled workers: physicians. The other two essays, "Exiting TANF in South Carolina after the Deficit Reduction Act" and "What Happened to Cash Assistance for Needy Families," focus on a group of generally low-skilled, low-wage workers: welfare recipients. "Exiting TANF in South Carolina after the Deficit Reduction Act " examines the impact of a recent welfare reform aimed at promoting employment and self-sufficiency on durations of welfare recipiency. "What Happened to Cash Assistance for Needy Families?" identifies trends in welfare recipiency and self-sufficiency over the past twenty years. While a number of studies have attempted to measure the impact of financial incentives on physician behavior, none has examined the impact of performance-based incentive pay on broad measures of physician effort. In "Does Incentive Pay Alter Physician Effort? An Analysis of the Time and Treatment that Physicians Provide to Patients." I use newly available data from the National Ambulatory Medical Care Survey from 2006 through 2008 to estimate the effect of three specific types of performance-based incentive pay -- productivity incentives, patient-centered incentives, and practice profiling incentives -- on both the time physicians spend with patients and the intensity with which physicians treat patients. Using a discrete factor approximation approach to control for the endogeneity of incentive pay, I am able to estimate the impact of these types of incentive pay on physician effort. I find that performance-based incentive pay is associated with physicians spending significantly less time with each patient. I also find some evidence that performance-based incentive pay impacts physicians' intensity of treatment. The Deficit Reduction Act of 2005 (DRA) narrowed and standardized the work and work readiness activities that satisfy the work requirement of the Temporary Assistance for Needy Families (TANF) program. In "Exiting TANF in South Carolina after the Deficit Reduction Act, " I use administrative data from South Carolina's TANF program and employ event history techniques with a difference-in-difference estimation framework to analyze the effect of this policy change. I find that the DRA's definition of work and work readiness activities reduced the likelihood of black recipients to exit the TANF program in South Carolina while increasing the likelihood of exit for non-black recipients. For blacks, this decrease in the hazard comes from a decrease in the likelihood of exit through employment. For non-blacks, the result stems from an increase in the hazards for administrative exits and for other income exits. I also find that the reform led to longer durations of TANF benefit receipt in South Carolina for black recipients and shorter durations of cash assistance for non-black recipients. A primary goal of welfare reform since the early 1990's has been to increase the self-sufficiency of welfare recipients. The essay "What Happened to Cash Assistance for Needy Families?, " coauthored with David. C. Ribar, examines trends in the characteristics and outcomes for recipient families to determine if welfare recipients are becoming more self-sufficient. Using annual public use data on AFDC and TANF households from the Department of Health and Human Services, we find both positive and negative trends over the past twenty years. We find that the size of the caseload has decreased, the fraction of the caseload with earned income has increased, and the average earnings of welfare recipients has increased. On the other hand, we find that the fraction of child-only cases has increased, the caseload has disproportionately dropped the least-skilled households, average benefits fell faster than earnings grew, and the majority of households that exit TANF have no earnings."--Abstract from author supplied metadata.