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on Insurance Economics |
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Issue of 2007‒05‒12
five papers chosen by Soumitra K Mallick Indian Institute of Social Welfare and Bussiness Management |
| By: | Kevin Lang; Hong Kang |
| Abstract: | We develop a model in which firms hire heterogeneous workers but must offer all workers insurance benefits under similar terms. In equilibrium, some firms offer free health insurance, some require an employee premium payment and some do not offer insurance. Making the employee contribution pre-tax lowers the cost to workers of a given employee premium and encourages more firms to charge. This increases the offer rate, lowers the take-up rate, increases (decreases) coverage among high (low) demand groups, with an indeterminate overall effect. We test the model using the expansion of section 125 plans between 1987 and 1996. The results are generally supportive. |
| JEL: | H22 H24 I11 J32 |
| Date: | 2007–04 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:13066&r=ias |
| By: | Pozzolo, Alberto Franco; Focarelli, Dario |
| Abstract: | This paper investigates what factors might help explain the internationalization strategy of banks and insurance companies, by comparing the determinants of cross-border M&As in the two sectors in a unified framework. The empirical analysis shows that between 1990 and 2003 the internationalization of banks and insurance companies followed similar patterns. Distance and economic and cultural integration are important determinants for both the banks’ and the insurance companies’ expansion abroad. Comparative advantage also has a prominent role, the more so for banks. The evidence is less supportive of the view that cross-border M&As are more frequent between similar countries, as predicted by the new trade theory. Finally, and most interestingly, we find indirect evidence consistent with the hypothesis that implicit barriers to foreign entry are more important in explaining the behavior of banks than that of insurance companies. |
| Keywords: | international banking and insurance, foreign direct investment |
| JEL: | E30 G21 G22 F21 F23 |
| Date: | 2007–04–10 |
| URL: | http://d.repec.org/n?u=RePEc:mol:ecsdps:esdp07032&r=ias |
| By: | Marisol Rodríguez (Grup de Recerca en Economia del Benestar (CREB, Departament de Política Econòmica i Estructura Econòmica Mundial, Universitat de Barcelona); Alexandrina Stoyanova (Grup de Recerca en Economia del Benestar (CREB), Departament d'Economia i Empresa, Universitat de Barcelona) |
| Abstract: | The 1998 Spanish reform of the Personal Income Tax eliminated the 15% deduction for private medical expenditures including payments on private health insurance (PHI) policies. To avoid an undesirable increase in the demand for publicly funded health care, tax incentives to buy PHI were not completely removed but basically shifted from individual to group employer-paid policies. In a unique fiscal experiment, at the same time that the tax relief for individually purchased policies was abolished, the government provided for tax allowances on policies taken out through employment. Using a bivariate probit model on data from National Health Surveys, we estimate the impact of said reform on the demand for PHI and the changes occurred within it. Our findings suggest that the total probability of buying PHI was not significantly affected. Indeed, the fall in the demand for individual policies (by 10% between 1997 and 2001) was offset by an increase in the demand for group employer-paid ones, so that the overall size of the market remained virtually unchanged. We also briefly discuss the welfare effects on the state budget, the industry and society at large. |
| Keywords: | Private health insurance, tax reform, Spain. |
| JEL: | I10 H31 |
| Date: | 2006–12 |
| URL: | http://d.repec.org/n?u=RePEc:xrp:wpaper:creap2006-12&r=ias |
| By: | Heathcote, Jonathan; Storesletten, Kjetil; Violante, Giovanni L |
| Abstract: | This paper develops an analytical framework to study consumption and labour supply in a rich class of heterogeneous-agent economies with partial insurance. The environment allows for trade in non-contingent and state-contingent bonds, for permanent and transitory idiosyncratic productivity shocks, and for permanent preference heterogeneity and idiosyncratic preference shocks. Exact closed-form solutions are obtained for equilibrium allocations and for the first and second moments of the equilibrium joint distribution over wages, hours and consumption. With these expressions in hand, we show that all the structural preference and risk parameters in the model can be identified, even when productivity risk varies over time, given panel data on wages and hours, and cross-sectional data on consumption. We estimate the model on CEX and PSID data for the U.S. economy over the period 1967-1996. We then use the estimated parameter values to decompose inequality in all variables of interest, both over the life-cycle and across time, into cross-sectional variation in preferences, uninsurable wage risk, insurable wage risk, and measurement error. |
| Keywords: | consumption; incomplete markets; inequality; labour supply; partial insurance |
| JEL: | D31 D52 D58 D91 E62 G12 J22 J31 |
| Date: | 2007–05 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:6280&r=ias |
| By: | Gregory C. Chow (Princeton University) |
| Abstract: | After describing the institutions for health care in China as they evolved since 1949, this paper presents statistical demand functions for health care. It applies the demand functions to explain the rapid increase in health care demand and the resulting rapid increase in price when supply failed to increase. The failure in increase in supply was traced to the system of public supply of healthcare in China. The reform experience of Suqian city in the privatization of healthcare is reported to demonstrate the positive effect of privatization on supply. The government’s health care program for the urban and rural population is described and an evaluation of it is provided. |
| Date: | 2006–08 |
| URL: | http://d.repec.org/n?u=RePEc:pri:cepsud:132chow&r=ias |