Econ State&Local Gov.

Second Take Home Assignment F18

Econ 318

This is due on Tuesday 12/4. Answer both questions.

Each answer should be around 750 words.

1. Health care costs, and especially Medicaid costs, are now the largest category of spending in most states. What is Medicaid? How big a portion of state budgets go to Medicaid? Where to most Medicaid dollars go (what type of spending, on what groups)? In addition to class notes, data can be found on the website of Kaiser Family Foundation.

A major source of rising Medicaid spending is more general increases in US health care costs. Using the readings, class notes, data from the OECD and WHO, how do US health costs compare with other countries? What are the major drivers of US health care spending?

2. Read Rethinking Growth by Lynch (p 25-38, on blackboard), the executive summaries of the latest studies by Timothy Bartik at the Upjohn Institute, class notes and the supplementary readings on the syllabus. Based on these sources, do tax credits and other incentives work in attracting businesses to an area and creating jobs in a cost-effective manner? Do these studies account for loss of government spending as a result of lower revenues? Recently, there have been a number of well-publicized accounts in the media of economic incentives offered to amazon, Foxconn, Boeing and the film industry. How much do these incentive cost on a per-job basis?

According to Bartik, incentives raise approximately $0.5 for every $1 lost by the state. What are some policies that state and local governments could invest in with far bigger payoffs?