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on Insurance Economics |
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Issue of 2007‒08‒14
four papers chosen by Soumitra K Mallick Indian Institute of Social Welfare and Bussiness Management |
| By: | Randall P. Ellis (Department of Economics, Boston University); Ching-to Albert Ma (Department of Economics, Boston University) |
| Abstract: | In our theoretical model some firms do not offer health insurance to their employees because of large between-firm heterogeneity in expected employee health care costs. Because job turnover rates for healthier employees reduce by less than those for sicker employees when firms offer health insurance, expected health costs will increase when health insurance is offered. We call this adverse job turnover. State regulations on annual premium changes, and insurer reluctance to rapidly increase premiums mean that coverage is only offered to small firms at premiums above initial expected costs. The resulting separating equilibrium is one in which some firms face high initial premiums, choose not to offer insurance, and tolerate higher turnover rates than other firms the same industry that offer insurance. High administrative costs at small firms exacerbate selection. Using 1998-99 MEDSTAT MarketScan and 1997 Employer Health Insurance Survey data we find that expected employee health expenditures at firms offering insurance have lower within-firm and higher between-firm variance than at firms not offering insurance. Turnover rates are systematically higher in industries not offering insurance, and small firms have lower withinfirm variance but greater between-firm variance than large firms in their employee’s age and income distributions. These support our model. |
| Keywords: | health insurance, job turnover, adverse selection |
| Date: | 2007–07 |
| URL: | http://d.repec.org/n?u=RePEc:bos:wpaper:wp2007-035&r=ias |
| By: | Carbonai, Davide; Di Bartolomeo, Giovanni |
| Abstract: | This paper investigates the market structure of the insurance business by analyzing the (interlock) linkages among companies created by their directors. We focus on the non-life business since this is a sector relatively closed with respect to the competition with other financial activities; an absence of industry competition cannot thus be compensated by other agents. We apply the graph theory to describe the network and the principal component analysis to summarize information and verify the correlation between direct interlocking and companies’ market shares. |
| Keywords: | Non-life insurance; antitrust; competition; interlocking directorates; network economics. |
| JEL: | K23 K21 K0 |
| Date: | 2006–11 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:4420&r=ias |
| By: | Chami, Ralph; Sharma, Sunil; Shim, Ilhyock |
| Abstract: | The paper shows that an IMF-like coinsurance arrangement among countries can play a useful role in the global financial system. The operation of the coinsurance arrangement is examined under different loan contracts. It shows that, if the IMF´s objective is to safeguard its resources and be concerned about the welfare of the borrower, an ex ante loan contract is more likely to create the right incentives than an ex post loan contract. Such contracts highlight the need for precommitment to contend with the Samaritan´s dilemma and time inconsistency, and state-contingent repayment schemes to deal with King Lear´s dilemma. |
| Keywords: | IMF, coinsurance arrangement, moral hazard, Samaritan´s dilemma, King Lear´s dilemma |
| JEL: | D82 F02 F33 G22 |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:ifwedp:5731&r=ias |
| By: | Lisa Callegaro (Department of Economics, University Of Venice Cà Foscari); Giacomo Pasini (Department of Economics, University Of Venice Cà Foscari; Economics and Organization, School for Advanced Studies in Venice) |
| Abstract: | We study jointly the health perception of the elderly and the care giving decision of their adult children. Social interactions play a crucial role: elder parents' health perception depends on relations with household members. On the other hand adult children make their care giving decisions strategically, meaning that each of them considers his siblings' decision. We find empirical evidence which support this claim using the 2004 wave of the SHARE survey. We estimate social interaction effects by means of methods taken from the spatial econometric literature. Health perception relation with care giving depends on the determinants of adult children's decision to care: Parents' health may be modelled as a common good for parents and children; the latter's decision may be driven by bequest motives or by pure altruism and/or cultural values. We test implications of the model thanks to the unique features of the SHARE dataset: it is trans--national, allowing to control for cultural and institutional differences, it contains information on health status of over-50 Europeans and details on their social and intergenerational relations. |
| Keywords: | Insurance, Social SHARE, care giving, social interactions, health, aging |
| JEL: | L26 |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:ven:wpaper:10_07&r=ias |