Unemployment, Negative Equity, and Strategic Default
Kristopher Gerardi, Kyle F. Herkenhoff, Lee E. Ohanian, and Paul S. Willen
Working Paper 2013-4 (August)
Although job loss and negative equity both loom large in a homeowner's decision to default, the authors use household-level data to find that a household's employment status is the strongest predictor of defaults. They also find that the vast majority of homeowners who default do not have enough liquid assets to make a single monthly mortgage payment, which calls into question the significance of strategic default in the mortgage market.
Even One Is Too Much: The Economic Consequences of Being a Smoker
Julie L. Hotchkiss and M. Melinda Pitts
Working Paper 2013-3 (July)
That smoking leads to lower wages is well established, but what factors are behind this negative relationship? Examining the wage gap between smokers and nonsmokers, the authors find that productivity is not the biggest factor hindering smokers' lagging wages. Rather, other characteristics smokers bring to the market play a larger role.
Old, Sick, Alone, and Poor: A Welfare Analysis of Old-Age Social Insurance Programs
R. Anton Braun, Karen A. Kopecky, and Tatyana Koreshkova
Working Paper 2013-2 (July)
Do Social Security, Medicaid and other means-tested social insurance programs benefit retirees? The authors find that means-tested social insurance programs enhance welfare by providing the aged with insurance against medical expense risks such as nursing home stays. When these programs are available, the authors find there is no need for Social Security.