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Author's Name: Stefanie Schurer
Date: Fri 08 May 2020

Stefanie Schurer

Professor Stefanie Schurer

Stefanie Schurer is a Professor of Economics in the School of Economics at the University of Sydney. She also leads the Economics of Human Development research node at the Charles Perkins Centre. She has produced some of the first insights on the stability and determinants of personality (non-cognitive skills-soft skills-life skills-character skills) over the lifecourse. Her current research program focuses on the impact of public policy on human development. She is a chief investigator on several linked administrative data projects in Australia. She uses such big data to study the consequences of Australia's key family, welfare, and medical policies for (Indigenous) children. She is a Visiting Scholar at the University of Chicago, a Research Fellow at the IZA Bonn and a member of the Human Capital and Economic Opportunity (HCEO) network. She is on the editorial board of the Journal of Economic Behavior & Organization. The recipient of numerous fellowships and research grants, she obtained a PhD and Masters degree in Economics from the Ruhr Graduate School in Economics (Germany) and the University of York (UK), respectively.


Subject Area Expertise

Microeconomics, Economics of Human Development, Public Policy

Website

Company website: www.stefanie-schurer.com


Responses (10)


Promoting vaccination uptake in Australia

Poll 49

"What measures should Australian governments adopt to promote demand for vaccination once supply is no longer a constraint?"

Photo credit "Wes Mountain/The Conversation, CC BY-ND"

 

National advertising campaigns;Mandatory vaccination for higher risk occupations;Lotteries with cash or prizes for the vaccinated;Vaccine passports for higher-risk settings (eg. flights, restaurants, major events)

Mandates, passports, more fun and less fear In a world, where individual freedoms are already wildly curbed, vaccination mandates and passports are not an unreasonable or infeasible strategy to boost vaccination rates. This strategy in combination with a variety of softer-touch interventions and fun campaigns to reduce fear will help us re-establish our beloved mobility freedoms. Here are some ideas that also make economic sense. The demand for Covid19 vaccination is a complex matter. Standard economic demand theory breaks down in this context as individuals do not pay a price for the vaccine (although supply is price dependent). Thus, a typical price tool in the government?s tool box to boost demand ? price ceilings ? are of no relevance here. Strategies to increase the quantity of vaccines demanded must therefore involve non-price interventions. I personally consider interventions that shape the expectations, believes and preferences of the yet-to-be vaccinated population as the key starting point. Another important consideration are interventions that reduce transaction costs for people yet-to-be vaccinated. And of course, mandates are critical in a setting where individual decision-making can have major costs to society. Generating 100% vaccination uptake from people who are expected to be affected by the Covid19 outbreak (or any other infectious disease of great public health concern) is impossible. Consider for example the so-called MMR1 vaccination to prevent the spread of highly contagious childhood diseases. Australia has a vaccination coverage for five-year olds of 95% today, a coverage deemed necessary to achieve herd immunity for eg the highly infectious measles. This number wasn't always that high. Australia achieved this coverage through implicit mandates. A requirement for children to meet immunisation schedules has been attached to childcare payments since 1998 and for the FTB-A supplement from 2012. Families can access their family-related Centrelink payments only if their child?s vaccination schedule is up to date. In 2015 exemption rules were tightened to make it harder for so-called ?conscientious objectors?. Some states have also introduced vaccination mandates for children to access child-care centres (eg NSW in 2014). So, federal and state legislation can provide for such targeted mandates. Some may argue that immunisation mandates are too invasive, that they would be restricting individual freedoms too much: the freedom over one?s own body and its integrity. However, in a world where individual freedoms -- local, domestic, and international mobility -- are already radically and continuously restricted, mandates don?t appear to be off the charts. I support mandating vaccination of high-risk workers if relevant medical exemptions are provided for. A recent opinion piece in the Medical Journal of Australia argues that this is legally possible: "The federal government has limited but available powers to enact compulsory vaccination for high-risk workers under the Biosecurity Act, and while there is variation among states and territories, compulsory vaccination is allowed for in Victoria and WA and could be enabled via passage of specific legislation elsewhere" (see https://www.mja.com.au/journal/2021/215/1/medico-legal-considerations-mandatory-covid-19-vaccination-high-risk-workers). Note, the Australian Government announced end of June 2021 that COVID-19 vaccinations would be made mandatory for residential aged care workers. All workers in aged care will be required to receive their first dose of the vaccine by September this year. Some states and territories have also issued public health orders mandating vaccination for certain industries or workers. For example, Queensland has a public health order in place mandating vaccination for health service employees who are likely to encounter and treat people with COVID-19. I personally support such measures during an epidemic, although I would never opt for such policies under normal circumstances. In addition, the Government can and should use more standard tools from the economist's toolbox. As a guiding principle for any intervention, life should be made easier for people who are vaccinated, and more difficult for people who are not. This will create the right incentives for unvaccinated people to reconsider their choices. It is for this reason that I personally support vaccination passports that grant access to large public events (e.g. access to concerts, stadiums, lectures ect) and most importantly domestic and international travel. The European Union has introduced such requirement to re-establish basic individual freedoms (no quarantine is required if a negative Covid test is presented). Some would even go so far to make them compulsory to access restaurants. France is currently battling with such ideas. I am personally less in favour of paying cash incentives to highly-reluctant vaccine uptakers. I am not generally opposed to cash incentives. They have proven useful in other public health campaigns. For instance, financial incentives are effective to reduce the incidence of smoking during pregnancy or to increase the willingness to attend school during adolescence to reach a critical education threshold. The main problem with cash incentives is that they cannot be targeted in the context of Covid19. For instance, if the government considered in the public debate a cash transfer of let?s say 300$, people may wait with vaccination until the Government will start paying the cash incentive. That would delay vaccination rollout. Thus, I am opposed to such cash incentives. I am more in favour of paying incentives to general practitioners to ensure that their registered patients are up to date with Covid vaccination and provide the relevant information. Let them call up their registered patients and lure them into their practice for the jab. It's possibly one of the very few examples where supplier-induced demand is a good thing. Australia has experience with such initiatives. The 2015 budget earmarked $26.4 million over four years to improve immunisation coverage rates, particularly in children and adolescents. The Government intended to make an incentive payment to doctors and other immunisation providers when they identify a child who is overdue for vaccination and call them in for a catch up, fund an awareness campaign to promote immunisation and address parents' concerns regarding immunisation and; expand the existing National Human Papillomavirus Vaccination Program Register to include all adolescent vaccinations delivered in schools under the NIP. So, we have already a lot of experience with such incentives. This brings me to talk about softer-touch interventions. A big-win lottery could be helpful to put a positive vibe and some fun on the whole vaccination rollout. This lottery should be combined with a funky national advertising campaign that communicates simple and clear messages about the effectiveness of vaccines. The government could hire sports and entertainment celebrities to speak out. It could be combined with a fun competition that encourages citizens to provide their own solutions to the vaccine hesitancy problem. The government could offer prizes for the three most innovative and practical ideas to boost vaccination rates. Instead of being numbed by fear, Australians should feel empowered through the vaccine rollout. Here are some ideas how philantropic organisations have incentivised crowdsourcing of ideas to create better neighbourhoods: https://ssir.org/articles/entry/six_ways_contests_improve_philanthropy Last but not least, I propose that the state governments bring vaccination clinics closer to the homes of people. I want to see vaccination trucks (like those blood donation trucks) drive through neighbourhoods. During a pandemic, reasonable people will avoid public places. They will not want to go to their GP practice where they may catch Covid19 or other diseases. As we will continue to be in lockdown for some extended time, vaccination trucks should be driving through neighbourhoods now and knock on people?s doors. My neighbour told me she could get the Astra Zeneca jab any day from her GP, but she is wary of going to the GP and doesn't want to spend the time travelling. Thus, I suggest the Government should help reduce these transaction costs. Mobile vaccination trucks will achieve higher vaccination rates.


Policies to deliver higher wage growth

Poll 48

Our panellists were asked

"Higher wages growth is now a top priority of the RBA in its efforts to sustain stronger economic growth. Please identify the three of these government policies you think would best help deliver higher wages growth".  

Photo credit "Wes Mountain/The Conversation, CC BY-ND"

 

.

Measures to boost productivity growth;Measures to boost business investment;Maintaining high governm

Australia is currently experiencing supply shocks that translate into demand shocks because of renewed lock downs. Current forecasts suggest varying degrees of lock downs will be part of daily life way into 2022. Thus, the Government needs to step in with a generous fiscal policy to compensate for short and longer-term income losses among businesses and households, and unfavorable business investment climates. I personally support hard lock downs only if the Government steps in to compensate for such income losses. Given longer term trends in productivity and demographic change (with a declining population), we need more migration (both temporary and permanent), not less. Our own research - with Maryam Nagsh Nejad (UTS) - has shown that Australia's migrants have brought a high level of skills - both cognitive and non-cognitive - to Australia, skills that have also been passed on to the children of migrants. High levels of skills are needed for generating productivity growth. Links to this research can be found on my homepage: https://www.stefanie-schurer.com/publications


October Budget 2020 - preferred four programs

Poll 42 

"The October budget will see the government announce additional policies to support recovery.  Please nominate the four programs you think would be the most effective (for an intervention of a given size) over the next two years"

Photo Credit: Wes Mountain/The Conversation, CC BY-ND 

 

Infrastructure projects, Incentives for renewable energy, Incentives for cleaner fossil fuel energy, More funding for education and training

Australia would fare well if it adopted a New Deal type of investment strategy in its next budget to buffer the economic crisis and increase employment opportunities. Crisis spending should be used to invest in human capital development (education & training), large, socially-valuable infrastructure projects and in future-oriented industries. All of these investments will generate high returns in the future, while picking up the unemployed from the streets. Wage subsidies or cash transfers are very good short-term measures but they should not be used in the medium to longer term. They create disincentives for firms to be competitive and use resources in the most efficient way. In plain terms, they make business owners lazy. Incentivising investment in renewable/clean energy today will create jobs and ensure that Australian technology becomes competitive in this worldwide growing market. It will also ensure that Australia remains an attractive and clean place to live. Think of Norway, which generates all of its energy needed with hydropower. Excess energy is exported to other countries. Country is clean and livable. Large infrastructure investments can help to generate immediate employment, while creating a great public resource that pays dividends in the future. A very good example is the Hoover Dam, which was built during the Great Depression. It generated employment for over 20000 men during its 5-year construction. Why not building a massive dam in Australia like the Hoover Dam? Why not building a new Sydney Symphony Orchestra Building (like the "Berlin Philharmony"). Why not expanding the National Parks? Why not building Green Libraries all over Australia? Why not extending the National Broadband Network further, so that Telemedicine becomes feasible and successful? Why not building an Aboriginal History Museum dedicated to Aboriginal and Torres Straight Islander culture, art and economy? I thus support budget items that finance public investments that pay off in the future, and generate employment today.


Government Debt during the COVID19 Crisis

Poll 40

"Governments should provide ongoing fiscal support to boost aggregate demand during the economic crisis and recovery, even if it means a substantial increase in public debt"

Photo Credit: Wes Mountain/The Conversation, CC BY-ND 

 

Strongly agree

9

Australia has one of the lowest government debts -- as percentage of GDP -- among OECD countries. In December 2019, this debt ratio was 45%. In comparison to Germany (60%), the UK (81%), EU (80%) and the US (107%), Australia's government debt ratio is low. It is similar to Switzerland's and Norway's (~41%), two exceptionally rich countries with a healthy and functional public sector and a thriving private sector. Thus, Australia will be able to increase its public debt substantially, without compromising its financial health.


Transition to electric cars

Poll 47

This month, our panellists were asked whether Australia should take action to speed the transition to electric cars.

"As part of efforts to reduce carbon emissions, Australian governments should take action to accelerate the take up, or take no action to accelerate the take up of electric cars"

Photo credit "Wes Mountain/The Conversation, CC BY-ND"

 

Remove the luxury car tax from all-electric cars, Subsidise the purchase of all all-electric cars, Subsidise public charging points for electric cars

10

Subsidies are an effective tool to change consumer preferences, including tastes for cars. In the past decade, the market share of Sport Utility Vehicles (SUVs) climbed to almost 50% (https://www.carsguide.com.au/car-advice/australian-car-market-car-sales-statistics-and-figures-70982). The biggest winners in recent years were dual-cab utes. These are super-bulky tanks that take up almost two lanes in family neighbourhoods. They easily knock cyclists off the road because their owners don't know how wide they are. The reason for the stark increase in their sales is that the government gives tax benefits (when used for work) and special parking privileges in cities (ute drivers can use loading zones: https://www.carsguide.com.au/car-news/toyota-hilux-not-tesla-model-3-why-the-government-incentivises-us-to-buy-utes-instead-of). There are no tax or other incentives for electric vehicles (EVs) except for a modest lift in tax thresholds that comes into effect 1 July 2021 (https://thedriven.io/2021/06/01/australia-raises-luxury-car-tax-threshold-for-evs-for-second-year-in-row/). It comes at no surprise that such EVs are rarely seen on Australian roads. Sales statistics confirm this impression. Australia is falling behind dramatically in a global competition for carbon emission reduction. The smartest governments worldwide now compete for being the quickest to transform their countries into low-carbon economies, clean technology powerhouses, and locations of pollution-free cities. Whereas the most innovative countries in the world heavily subsidise EV sales and privilege EV users in cities and on the roads (e.g. Norway, Germany), Australia opts for subsidising the big polluters. And why? Australia builds its economic recovery on ute sales and thus gives those tax write offs (https://thenewdaily.com.au/finance/2021/06/11/utes-tax-write-offs/). It's for a short-term gain. And that is idiotic.


Wage freeze for economic recovery

Poll 39

"A freeze in the minimum wage will support Australia's economic recovery"

Photo credit: Wes Mountain/The ConversationCC BY-ND 

 

Strongly disagree

9

I have understood the question as hypothetical, because the Fair Work Commission (FWC) has just increased national minimum wages by 3 percent, amounting to an extra $21.60 a week. This is a lower increase than the increases seen in the past two years and what the Australian Council of Trade Unions had requested (6 percent). Yet, the increase is substantially higher than what industry groups had hoped for (1.8-2 percent) and expected inflation for 2020-21 (experts predict 1.2-1.6 percent). From an economic perspective, the "increase" in the minimum wage, as opposed to a "freeze", is welcomed. My disagreement with the above statement and my support for an increase in the minimum wage is based on the following argument: Theoretically, minimum wages have ambiguous effects on aggregate demand. On the one hand, they could increase aggregate demand, as lower-income workers tend to have higher marginal propensities to consume. On the other hand, they may reduce employment and thus aggregate demand. As there is little empirical evidence for the latter proposition in the international and national literature and because of modest inflation expectations, I would have rejected the idea of freezing the minimum wage. Australia’s minimum wage is unlike the ones in the UK and US. Minimum wages exist in many industries and have a wide range, affecting almost 40% of Australian workers directly and indirectly. A large proportion of Australian workers - around 1 in 6 - will be directly affected by the minimum wage increases offered by the FWC, many of which are low-income earners. To support Australia’s economic recovery, it is critical to keep consumer spending high in general, but specifically of low-income earners who are more likely to spend their income gains. This could compensate for aggregate demand reductions associated with closed borders and a collapse of international tourism.


The Federal Budget May 2021

Poll 46

"On May 11, the government delivered a budget designed, in the Treasurer's words, to 'secure Australia's economic recovery and build for the future'.  What grade would you give the budget given that objective, A, B, C, D, E, F?"

Photo credit Wes Mountain/The Conversation, CC BY-ND

 

.

D

Under the assumption that "A" implies the best grade and "F" the worst - I assign the budget a grade of "D" if the aim was to ?secure Australia?s economic recovery and build for the future?. The budget does not include critical expenditure items that demonstrate investment in the future. I welcome the strong "welfare" elements of the budget, by supporting low- and middle-income earners, single moms, and families with children through the tax system. Resource allocations to the aged-care sector, mental health care, and child care are likely to be highly beneficial for social welfare. However, I am missing visionary long-term investments. I had hoped for a "New Deal" type of budget. Rather than just handing out subsidies to specific groups of society and keeping workers employed, I would have liked to see the Government commit to long-term investments in sectors that will generate jobs 10-30 years down the track, such as clean energy production, pharmaceutical research & vaccine production, communication technologies, and building research infrastructure & skills. It is surprising to see that no investments are made into universities at a time where the tertiary education sector is hardest hit through border lockdown and at risk of loosing its competitive edge. Given that Australia has been falling behind dramatically in its vaccination effort and ability to secure vaccination doses, I would have expected the Government to invest heavily in pharmaceutical research and vaccine manufacturing. The 2021 budget is built on the assumption that the Government's vaccination rollout will be complete by the end of 2021. At current rollout rates per week, it will take Australia's 30 more months to fully vaccinate its population. It is now time to open up vaccination to everyone who wants to. Because of low take up among those eligible, the Government is risking to waste many doses which expire within the next three months.


Social Distancing Measures, May 2020

Poll 38

"The benefits to Australian society of maintaining social distancing measures sufficient to keep R<1 for COVID-19 are likely to exceed the costs"

 

Strongly agree

9

In German we say: better a painful ending than an endless pain. Let me explain this. Short and medium term failure to eliminate, or at least slow down the spread of, the coronavirus virus will entail significant political, economic and social costs in the long run. Social distancing measures are no unjustified nuisance. Currently, they are the only option available to policy makers to curtail the capacity of the virus to spread ? measured by R, the so-called reproduction factor. The lower R, the lower is the spread of the virus. Some have argued that we should have gone for herd immunity to deal with the crisis. To achieve herd immunity, a certain share of the population must be infected and we need to assume that exposure to the coronavirus means protection against future infections. R determines how big that share must be. For instance, in a society under normal conditions, Covid's R ~ 2.5. This means that one person infected would spread it to 2.5 others. It has been widely discussed that about 60% of the population would need to be both infected and become immune to the virus (share=1-1/R). Would we like to expose 60% of the population to the virus, knowing that there is no treatment other than ventilation and that about 1% - although a contestable number - are likely to die? I do not think that policy makers would find volunteers for this experiment. Maybe it is better to make the virus behave a bit more like the flu, slow the speed of its spread to R~1.3. In this case, we would still need about 23% of the population to be exposed to achieve herd immunity. With the assumed case mortality rate, that would still imply a loss of life of 57,500 Australians (#deaths=1% of the 23% of population, ~25 million, who were exposed). If that number is still not acceptable, or if we cannot ensure that exposure means protection, which we cannot, then the only other option is virus elimination. This could be achieved, if R<1, or in plain words: every corona-infected person passes the virus on to less than one other person. Germany, which used very strict lockdown measures, achieved this for some time. When R was steadily < 1, and when a role-model testing and tracking system was in place, the Merkel government prepared for opening up the economy. Recent reports have shown that R has increased already to above 1 with the opening of the economy. The world has its eyes on Germany to learn how effective its strategy is to eliminate the virus. So, why do I think that keeping R<1, with the help of social distancing measures, outweighs the likely costs? To answer this question, one needs to think about both short-term and the long-term costs, and the dynamics in the lifecycle of a virus. The short-term costs are predictable. Australia will experience its first recession in almost three decades. Unemployment will rise, businesses will go bankrupt. Whether such recession will cause more deaths than Covid-19, cannot be answered yet. The good news is that the overall evidence from international data, and work that we have produced for Australia, suggests that recessions, if anything reduce mortality. The other good news is that Australia can buffer the economic consequences of the temporary hibernation of its economy through expansive fiscal policy. Expectations of a recession and the practical consequences of the lockdown will also entail psychic costs. They will certainly strain the emotional health of individuals and families, in particular the most vulnerable segments of the population: the old because of loneliness, and the children because of exposure to stressed family environments, a breeding ground for violence and maltreatment. These psychic costs must be taken very seriously by policymakers. Increased resource allocations to mental health and family service providers will be critical, so that they can increase their support services and target where advisable. A policy alternative that avoids, instead of alleviates, such economic and psychic short-term costs, is not advisable. The alternative would have been to have no social distancing measures at all, or to relax those in place prematurely. By prematurely, I mean before R is below 1 for extended periods of time (which scientists say is now happening in Australia). If social distancing measures were relaxed when R were 1 or greater, it would have the consequence that new hot spots of infections and deaths will emerge months down the track. It could even be that the virus comes back in full force, with reproduction rates way above 2. This would force politicians to reintroduce even harsher social distancing measures than the ones we have experienced in the past ten weeks. Such measures would certainly extinguish any revived economic activity. Theoretically, this could happen several times into the future, stretching out the battle against Covid-19 over years. Like a yoyo, the economy would bounce up and down between lockdown and easing, forcing companies, employers, employees, families, carers, and essential service providers to adapt over and over again. The uncertainty would be an emotionally draining and financially expensive exercise. In modern democracies, it is excruciatingly painful for politicians to restrict citizens? basic human rights. It is unlikely to see such rights restricted on a recurring basis without serious social unrest. Although Australia is a rich country, the economy cannot afford to roll out job and business rescue programs, the current one valued at 16% of GDP, whenever a new infection hotspot requires yet another hibernation of the economy. Thus, we must eliminate the virus now. A painful ending, achievable through keeping R<1, is economically and socially less costly, than the endless pain of allowing R to float freely above 1.


Top economists want JobSeeker boosted by $100+ per week and tied to wages

Poll 44

"Ahead of a decision about any permanent increase expected early next year, The Conversation and the Economic Society of Australia asked 45 of Australia’s leading economists where they thought JobSeeker should settle."

Photo credit : Wes Mountain/The Conversation, CC BY-ND

 

Remain indexed in line with the CPI

Unemployment benefits should be a short-term measure to support individuals who experienced voluntary or involuntary unemployment. The payment should be considered as a temporary measure. Thus, no incentives should be created to get habituated to the payment. Pensions are different, because retirement is a permanent state. The needs of the elderly are potentially higher (e.g. due to higher health care expenditures and care support), which justifies as more generous indexing. Yet, the original Newstart rate of $287.50 appears too low for e.g. single mothers. I have argued elsewhere that Newstart should be increased by about a sixth to factor in higher consumption needs of vulnerable families.


Does the budget rebuild our economy and create jobs?

Poll 43

"On 6 October, the Government delivered a budget designed, in the Treasurer's words, to 'rebuild our economy and create jobs'.  What grade would you give the budget given the objective?  A, B, C, D, E, F"

Photo Credit: Wes Mountain/The Conversation, CC BY-ND 

 

C

I would have liked to see more nation-building investment projects and more support for women, in particular working moms, who bore the brunt of the lockdown and other consequences of the pandemic.