JUE insight: Demand for transportation and spatial pattern of economic activity during the pandemic.

Using traffic data from Taiwan for 2020, we quantify how the COVID-19 outbreak affected demand for public and private transportation. Despite there being no governmental restrictions, substantial shifts in travel modes were observed. During the peak of the pandemic in Taiwan within the study period (mid-March 2020), railway ridership declined by 40% to 60%, while highway traffic volume increased by 20%. Furthermore, railway ridership was well below pre-pandemic levels, though there were no locally transmitted cases in the eight-month period from mid-April to December. These changes in traffic patterns had implications for spatial patterns of economic activity: retail sales and nighttime luminosity data show that during the pandemic, economic activity shifted away from areas in the vicinity of major railway stations.

The Welfare Effects of Extending Unemployment Benefits: Evidence from Reemployment and Unemployment Transfers

Unemployment insurance (UI) protects individuals from the risk of earnings loss during unemployment (i.e. insurance value), but it also distorts incentives to search for jobs (i.e. moral hazard). During a recession (e.g. the recent COVID-19 pandemic), extending UI benefits is one major policy tool that can be used to protect workers against adverse shocks. Although the duration of benefits as opposed to benefit levels is at the center of UI policy debates, most existing studies focus on the welfare effect of changing the UI benefit level. Empirical evidence regarding the value and welfare impacts of extending UI benefits (e.g. increase the potential duration of UI) is still scant. On the other hand, to reduce the moral hazard effect of UI, some countries have offered re-employment bonuses as financial incentives to workers who find jobs quickly. In fact, during the COVID-19 pandemic, the U.S. government has considered implementing a re-employment bonus (i.e. a back-to-work bonus), to reduce the financial burden on the UI system and get people to rejoin the workforce. While the disincentive effect of UI, measured by the elasticity of non-employment duration to UI benefits, has been estimated across a wide variety of UI contexts, the incentive effects of re-employment bonuses are less studied and still largely rely on early U.S. bonus experiments. In this paper, we contribute to the current literature by examining the above under-studied issues. In the first part of the paper, we exploit two significant UI reforms in Taiwan, in order to investigate how workers' search efforts respond to income transfer when re-employed and unemployed. In 2003, the Taiwanese government introduced re-employment bonuses whereby people would be paid 50% of their remaining UI benefits after regaining employment. The re-employment bonus program reached back to UI recipients receiving benefits when the program took effect in 2003. Therefore, it resulted in two kinks in the offer for which workers were eligible as a function of the dates the UI spells started. Thus, we use a regression kink (RK) design herein to examine the effects of the re-employment bonus. On the other hand, after 2009, workers who lost their jobs when aged 45 or over became eligible for 9 months of UI benefits instead of the 6 months offered to those under 45. We use a regression discontinuity (RD) design to examine the effects of extended UI benefits, by comparing the outcomes of individuals just before and just after being 45 years old at the point of being laid off. Our estimates using the RK design show that the provision of a reemployment bonus increases the monthly re-employment hazard by about 2 percentage points and significantly reduces benefits duration and nonemployment duration by 6% to 9%. Moreover, we find that faster reemployment does not significantly affect the quality of a job match, such as post-unemployment wage and job tenure. Second, our RD estimates suggest that a three-month increase in potential benefit duration reduces middle-aged UI recipients' monthly re-employment hazard by 3 percentage points. The implied elasticity of non-employment duration (UI benefit duration) with respect to potential benefit duration is 0.27 (0.78). However, being eligible for longer potential benefit duration has little impact on job match quality. In the second part of the paper, we integrate our reduced-form estimates with a search model to conduct welfare analysis. First, we investigate the behavioral costs of one NTD spending on the two policies. On the one hand, we find that the provision of re-employment bonus can induce the behavioral response (i.e. shortening spells of insured unemployment) that leads to a positive fiscal externality. The behavioral cost of one NTD of initial spending on the re-employment bonuses is −0.61 — the behavioral response to one NTD of re-employment bonus enhances the government budget by 0.61 NTD so that only 0.39 NTD have to be raised to finance one NTD of re-employment bonus. On the other hand, our estimates suggest that ex end ng UI benefits result in a negative fiscal externality. The behavioral cost of one NTD of spending on increasing potential benefit duration is 0.07, which is at the lower end of previous research. Second, we exploit the two sources of income variation—re-employment bonuses and extended UI benefits — to estimate the value of UI extension. The value of UI is fully captured by the marginal rate of substitution between consumption when unemployed and employed (MRS), because the MRS describes how much consumption workers are willing to give up when employed, in order to increase one NTD of consumption when unemployed. Since workers' responses in re-employment hazard depend on their marginal utilities of consumption, the differential responses in the reemployment hazard to extended benefits and re-employment bonuses help us identify the MRS. An important issue we must address before estimating theMRS is that Taiwan's UI extension increases not only the potential benefit duration, but also the qualification period for re-employment bonuses— the UI extension increases workers' income not only when unemployed, but also when employed. To recover the effect of a pure unemployment transfer, we decompose the effect of the UI extension on the re-employment hazard into two effects: (1) the effect of an unemployment transfer and (2) the effect of a re-employment transfer. Our estimates suggest that the marginal value of an unemployment transfer during an extended benefit period is about two times larger than that of a re-employment transfer, i.e. an MRS around 1.5 to 2.5. Combining the estimated value of extended benefits with its behavioral cost, the marginal value of public fund (MVPF) of extending UI benefits is about 1.3 to 2;thus, a welfare gain of one NTD spending on extending potential benefit duration is about 1.3 to 2 NTD.

Measuring voluntary responses in healthcare utilization during the COVID-19 pandemic: Evidence from Taiwan.

Healthcare has been one of the most affected sectors during the coronavirus disease 2019 (COVID-19) pandemic. The utilization of related services for non-COVID-19 diseases fell dramatically following the point at which the virus broke out; however, little is known about whether this observed decline in healthcare use was due to voluntary behaviors or enforced measures. This paper quantifies the spontaneous change in healthcare utilization during the pandemic. We utilize a county-by-week-level dataset from Taiwan's National Health Insurance (NHI) record, covering the entire Taiwanese population, and a difference-in-differences design. Our results indicate that even if there were no human mobility restrictions or supply-side constraints, people voluntarily reduced their demand for healthcare, due to fears of contagion, or COVID-related precautionary behaviors. We find that the number of outpatient visits (inpatient admissions) decreased by 19% (10%) during the pandemic period (February to May 2020). Furthermore, the demand response of healthcare for Influenza-like illness (ILI) was much greater and more persistent than for non-ILI, thereby suggesting that the substantial decline in accessing healthcare was induced by positive public health externality of prevention measures for COVID-19. Finally, we find that the demand for healthcare services did not get back to the pre-pandemic baseline, even when there were no local coronavirus cases for 253 consecutive days (mid-April to December 2020) in Taiwan.

Measuring Voluntary Responses in Healthcare Utilization During and After COVID-19 Pandemic: Evidence from Taiwan (preprint)

Healthcare has been one of the most affected sectors during the coronavirus disease 2019 (COVID-19) pandemic. The utilization of related services for non-COVID-19 diseases fell dramatically following the point at which the virus broke out; however, little is known about whether this observed decline in healthcare use was due to voluntary behaviors or enforced measures. This paper quantifies the spontaneous change in healthcare utilization during and after the pandemic. We utilize a county-by-week-level dataset from Taiwan's National Health Insurance (NHI) record, covering the entire Taiwanese population, and a difference-in-differences design. Our results indicate that even if there were no human mobility restrictions or supply-side constraints, people voluntarily reduced their demand for healthcare, due to fears of contagion, or COVID-related precautionary behaviors. We find that the number of outpatient visits (inpatient admissions) decreased by 21% (11%) during the pandemic period (February to May 2020). Furthermore, the demand response of healthcare for infectious diseases (e.g., flu) was much greater and more persistent than for non-infectious diseases, thereby suggesting that the substantial decline in accessing healthcare was induced by positive public health externality of prevention measures for COVID-19. Finally, we find that the demand for healthcare services did not get back to the pre-pandemic baseline, even when there were no local coronavirus cases for 253 consecutive days (mid-April to December 2020) in Taiwan.