nep-ias New Economics Papers
on Insurance Economics
Issue of 2009‒10‒03
four papers chosen by
Soumitra K Mallick
Indian Institute of Social Welfare and Bussiness Management

  1. Wage insurance within German firms: do institutions matter? By Guertzgen, Nicole
  2. Natural disasters, self-Insurance, and human capital investment: Evidence from Bangladesh, Ethiopia, and Malawi By Yamauchi, Futoshi; Yohannes, Yisehac; Quisumbing, Agnes R.
  3. The long and the short of emerging market debt By Opazo, Luis; Raddatz, Claudio; Schmukler, Sergio L.
  4. The impact of agricultural shocks on households growth performance in rural Madagascar By Anne-Claire Thomas

  1. By: Guertzgen, Nicole
    Abstract: Using a large linked employer-employee data set, this paper studies the extent to which employers insure workers against transitory and permanent firm-level shocks. Particular emphasis is given to the question of whether the amount of wage insurance depends on the nature of industrial relations. Adopting the identification strategy proposed by Guiso et al. (2005), it is shown that wage insurance is particularly apparent for individuals subject to collective wage agreements. While collective contracts alone are sufficient to fully insure workers against transitory shocks in small plants, they provide only partial insurance in medium-sized and large plants. At large employers, the joint existence of collective contracts and works councils helps to provide full insurance against transitory shocks, but provides only partial insurance against permanent shocks. This finding is consistent with the amount of insurance against permanent shocks being constrained by the possibility of considerable job losses and bankruptcy.
    Keywords: Wage insurance,linked employer-employee data,collective bargaining
    JEL: J31 J51
    Date: 2009
  2. By: Yamauchi, Futoshi; Yohannes, Yisehac; Quisumbing, Agnes R.
    Abstract: "This paper uses panel data from Bangladesh, Ethiopia, and Malawi to examine the impacts of disasters on dynamic human capital production. Our empirical results show that accumulation of biological human capital prior to a disaster helps children maintain investments during the post-disaster period. Biological human capital formed in early childhood (for example, good long-term nutritional status) helps insure resilience to disasters by protecting schooling investments and outcomes, even though disasters have negative impacts on the actual investments (for example, by destroying schools). In Bangladesh, children with more biological human capital are less adversely affected by flood, and the rate of investment increases with the initial human capital stock during the post-disaster recovery process. In Ethiopia and Malawi, where droughts are relatively frequent, repeated drought exposure reduces schooling investments in some cases, with larger negative impacts seen among children who embody less biological human capital. Asset holdings prior to disaster (especially intellectual human capital stock in the household) also help maintain schooling investments to at least the same degree as the stock of human capital accumulated in the children prior to the disaster. Our results suggest that as the frequency of natural disasters increases due to global warming, the insurance value of investments in child nutrition will increase. Public investments in child nutrition therefore have the potential to effectively protect long-term human capital formation among children who are vulnerable to natural disasters." from authors' abstract
    Keywords: Disasters, Human capital, Nutrition, Schooling, Self-insurance, Poverty reduction, Social protection, Shocks, Asset dynamics, Education,
    Date: 2009
  3. By: Opazo, Luis; Raddatz, Claudio; Schmukler, Sergio L.
    Abstract: Emerging economies have tried to promote long-term debt because it reduces maturity mismatches and the probability of crises. This paper uses unique evidence from the leading case of Chile to study to what extent there is domestic demand for long-term instruments. The authors analyze monthly asset-level portfolios of Chilean institutional investors (mutual funds, pension funds, and insurance companies) and compare their maturity structure to that of US bond mutual funds. Despite being thought to invest long term, Chilean asset-management institutions (mutual and pension funds) hold large amounts of short-term assets relative to US mutual funds and Chilean insurance companies. Short-termism is not driven by lack of instrument availability or tactical behavior. Instead, it seems to be explained by the desire to minimize inflation risk and, more importantly, by manager incentives that tilt demand toward short-term instruments. Extending the maturity of emerging market debt may require reducing risk and reshaping investor incentives.
    Keywords: Debt Markets,Emerging Markets,,Investment and Investment Climate,Deposit Insurance
    Date: 2009–09–01
  4. By: Anne-Claire Thomas (DIAL, University Paris Dauphine,EURIsCO)
    Abstract: (english) This paper tests if agricultural and climatic shocks have persistent impacts on consumption growth in 7 rural areas from Madagascar. The empirical framework is inspired by a standard Solow growth model. Shocks are introduced directly in the reduced form model as controls for factor productivity and investment level. This model is estimated on a panel of 6175 households observed each year between 1999 and 2004. Fixed effects are introduces to control for unobserved heterogeneity. We use idiosyncratic shocks on agricultural fields due to plant illness or predators and a covariate climatic shock measured by village rainfall deviations from long term means. Growth is measured by consumption growth. We use household total consumption, household per capita consumption, household total food consumption and household per capita food consumption. Estimation results indicate that covariate (rainfall) and idiosyncratic shocks on rice fields have persistent impacts on growth whereas idiosyncratic shocks on other crops than rice have no persistent impact. These average impacts are however not the same along income distribution. Estimation by income quintile shows that idiosyncratic shocks decrease future growth of poor household whereas rich household growth performance is protected against idiosyncratic shocks. Surprisingly, covariate shocks have persistent impact on rich household consumption growth but not on poor household consumption growth. _________________________________ (français) Cet article teste si les chocs agricoles et climatiques négatifs ont un effet persistant sur la croissance de la consommation des ménages dans 7 observatoires du Réseau des Observatoires Ruraux (ROR) à Madagascar. Autrement dit, on examine si un choc négatif sur la production agricole réduit les performances de croissance futures des ménages. Un modèle de croissance néo-classique de type Solow est mobilisé afin de spécifier la relation entre croissance de la consommation, caractéristiques du ménage et chocs. Ce modèle est estimé sous forme réduite sur un panel de 6175 ménages malgaches interrogés chaque année de 1999 à 2004. L’introduction d’effets fixes permet de contrôler pour l’hétérogénéité non observée. Les chocs sont introduits directement dans l’équation comme des variables qui déterminent la productivité des facteurs et le niveau d’investissement. Les chocs étudiés comprennent des chocs idiosyncratiques sur les cultures tels que les maladies des plantes et les destructions par des prédateurs et un choc climatique covarié mesuré par les déviations des précipitations par rapport à leurs moyennes de long terme village par village. Quatre agrégats sont utilisés pour mesurer la croissance : la croissance de la consommation totale du ménage, la croissance de la consommation par tête, la croissance de la consommation alimentaire totale du ménage et la croissance de la consommation alimentaire par tête. Les résultats d’estimation indiquent que les chocs covariés (précipitations) et les chocs idiosyncratiques sur les parcelles de riz réduisent durablement la croissance des ménages. Par contre, les chocs idiosyncratiques sur les autres cultures (maïs, tubercules, autres) n’ont pas d’impact persistant sur la croissance de la consommation. Ces effets moyens ne sont cependant pas homogènes sur toute la distribution des revenus des ménages. Les estimations réalisées par quintile de revenus montrant que les chocs idiosyncratiques ont un impact négatif persistant sur la croissance de la consommation des ménages pauvres tandis que les riches semblent protégés. De manière étonnante, les chocs covariés (précipitations) ont un impact persistent sur la croissance des ménages les plus riches mais pas sur celle des plus pauvres.
    Keywords: risk, poverty, growth, insurance,risque, pauvreté, croissance, assurance
    JEL: O12 D90 R20 Q12
    Date: 2009–09

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