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on Insurance Economics |
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Issue of 2009‒10‒10
ten papers chosen by Soumitra K Mallick Indian Institute of Social Welfare and Bussiness Management |
| By: | Florian Heiss; Daniel McFadden; Joachim Winter |
| Abstract: | We study the Medicare Part D prescription drug insurance program as a bellwether for designs of private, non-mandatory health insurance markets that control adverse selection and assure adequate access and coverage. We model Part D enrollment and plan choice assuming a discrete dynamic decision process that maximizes life-cycle expected utility, and perform counterfactual policy simulations of the effect of market design on participation and plan viability. Our model correctly predicts high Part D enrollment rates among the currently healthy, but also strong adverse selection in choice of level of coverage. We analyze alternative designs that preserve plan variety. |
| JEL: | C25 D12 H51 I11 I18 |
| Date: | 2009–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:15392&r=ias |
| By: | Hongbin Cai; Yuyu Chen; Hanming Fang; Li-An Zhou |
| Abstract: | We report results from a large randomized natural field experiment conducted in southwestern China in the context of insurance for sows. Our study sheds light on two important questions about microinsurance. First, how does access to formal insurance affect farmers' production decisions? Second, what explains the low takeup rate of formal insurance, despite substantial premium subsidy from the government? We find that providing access to formal insurance significantly increases farmers' tendency to raise sows. We argue that this finding also suggests that farmers are not previously insured efficiently through informal mechanisms. We also provide several pieces of evidence suggesting that trust, or lack thereof, for government-sponsored insurance products is a significant barrier for farmers' willingness to participate in the insurance program. |
| JEL: | C93 O12 O16 |
| Date: | 2009–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:15396&r=ias |
| By: | Daniel Clarke; Sefan Dercon |
| Abstract: | This paper asks how insurance can be more effectively delivered to the poor, and what its role should be relative to other microfinance programmes, safety nets and informal insurance systems. We focus on the various interactions, including how insurance may crowd out credit and informal insurance, and implications for the design of insurance schemes. We argue that well-designed insurance schemes, building on existing informal systems, and focusing on catastrophic and serious covariate risks, could offer protection against risk and contribute to poverty reduction beyond the combined impact of microcredit programmes, safety nets and existing informal mutual support systems. |
| Keywords: | Risks, Microcredit, Microinsurance, Safety nets |
| JEL: | G21 G22 O16 O17 |
| Date: | 2009–10 |
| URL: | http://d.repec.org/n?u=RePEc:une:wpaper:81&r=ias |
| By: | Gregorio Impavido; Ian Tower |
| Abstract: | This paper discusses the key sources of vulnerabilities for pension plans and insurance companies in light of the global financial crisis of 2008. It also discusses how these institutional investors transit shocks to the rest of the financial sector and economy. The crisis has re-ignited the policy debate on key issues such as: 1) the need for countercyclical funding and solvency rules; 2) the tradeoffs implied in marked based valuation rules; 3) the need to protect contributors towards retirement from excessive market volatility; 4) the need to strengthen group supervision for large complex financial institutions including insurance and pensions; and 5) the need to revisit the resolution and crisis management framework for insurance and pensions. |
| Keywords: | Asset management , Asset prices , Cross country analysis , External shocks , Financial crisis , Financial institutions , Financial risk , Insurance , Insurance regulations , Insurance supervision , Latin America , OECD , Pensions , Private investment , |
| Date: | 2009–07–20 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:09/151&r=ias |
| By: | Mok, Wallace (Chinese University of Hong Kong); Siddique, Zahra (IZA) |
| Abstract: | This paper examines differences in two important components of non-wage compensation, employer provided health insurance and pensions, across African Americans and the whites in the United States. Using data from the Current Population Survey (CPS) and the National Longitudinal Survey of Youth (NLSY), we study the recent trends in the recipiency of this non-wage compensation across race groups. Our results show that African American men on average are significantly less likely to receive employer provided health insurance and pension than whites in the last decade. We also find that the inclusion of racial differences in ability as measured by the Armed Forces Qualification Test (AFQT) score reduces the unexplained racial gap in fringe benefit offers, highlighting the importance of human capital variables in fringe benefit recipiency. Finally, we re-examine racial inequality in the labor market by examining within-group inequality in compensation over the last decade and also the role of ability in between-group inequality in compensation. |
| Keywords: | economics of minorities and races, non-wage labor costs and benefits |
| JEL: | I11 J15 J32 |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4435&r=ias |
| By: | Mauro Roca |
| Abstract: | This paper develops a general equilibrium model with unemployment and noncooperative wage determination to analyze the importance of incomplete markets when risk-averse agents are subject to idiosyncratic employment shocks. A version of the model calibrated to the U.S. shows that market incompleteness affects individual behavior and aggregate conditions: it reduces wages and unemployment but increases vacancies. Additionally, the model explains the average level of unemployment insurance observed in the U.S. A key mechanism is the joint influence of imperfect insurance and risk aversion in the wage bargaining. The paper also proposes a novel solution to solve this heterogeneous-agent model. |
| Keywords: | Consumption , Economic models , Employment , Financial risk , Income , Income distribution , Insurance , Labor markets , Private savings , Private sector , Unemployment , Wage bargaining , Wages , |
| Date: | 2009–09–02 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:09/188&r=ias |
| By: | Charalampos Economou; Claude Giorno |
| Abstract: | Greek health outcomes compare favourably with the OECD average. However, the health care system is seen as not working well by the population. One source of dissatisfaction is the high proportion of private household spending on health, including informal payments, while public health spending relative to GDP is one of the lowest in the OECD. This situation leads to inequities in access to certain medical services. Also, there is a weakening of efficiency of the system, which should be addressed sooner than later in view of a rising demand for medical services, which is going to intensify in the coming decades, and the need to keep government health care spending in check. This calls for reforms in four areas: (i) reviewing the excessively fragmented structure of the health care system and its governance; (ii) enhancing the quality of public primary health care services; (iii) modernising hospital administration; and (iv) further tightening control over pharmaceutical expenditure.<P>Améliorer la performance du système public de santé en Grèce<BR>Les résultats de la Grèce dans le domaine de la santé se comparent favorablement avec la moyenne de l’OCDE. Cependant, le fonctionnement du système de soins n’est pas satisfaisant selon la population. Une source d’insatisfaction concerne la proportion élevée des dépenses privées de santé des ménages, y compris des paiements informels, alors que les dépenses médicales publiques en proportion du PIB sont parmi les plus faibles de l’OCDE. Cette situation conduit à des problèmes d’équité d’accès à certains services médicaux. On observe aussi une baisse d’efficacité du système à laquelle il import de remédier au plus tôt compte tenu de la hausse de la demande de soins, qui devrait s’intensifier au cours des prochaines décennies et du besoin de contrôle sur la croissance des dépenses publiques de santé. Ceci milite en faveur d’une réforme dans quatre domaines : (i) réviser la structure très fragmentée du système de soins et sa gouvernance; (ii) améliorer la qualité des services publics de soins primaires ; (iii) moderniser l’administration hospitalière ; et (iv) renforcer davantage le contrôle sur les dépenses pharmaceutiques. |
| Keywords: | health care systems, hospital, data envelopment analysis, analyse par enveloppement des données, copayment, copaiement, excise tax, accises, general practitioners, médecins généralistes, generic drugs, génériques, health insurance funds, caisses d’assurance médicales, health policy, medical demography, démographie médicale, medical prevention, prévention médicale, National health system, système national de santé, primary health care, soins primaires de santé, pharmaceutical expenditure, dépenses pharmaceutiques, prescription system, referral system, système de médecin référent, hôpital |
| JEL: | I10 I12 I18 I19 |
| Date: | 2009–09–21 |
| URL: | http://d.repec.org/n?u=RePEc:oec:ecoaaa:722-en&r=ias |
| By: | Morissette, René; Ostrovsky, Yuri |
| Abstract: | Using data from a large Canadian longitudinal dataset, we examine whether earnings of wives and teenagers increase in response to layoffs experienced by husbands. We find virtually no evidence of an “added worker effect†for the earnings of teenagers. However, we find that among families with no children of working age, wives’ earnings offset about one-fifth of the earnings losses experienced by husbands five years after the layoff. We also contrast the long-term earnings losses experienced by husbands and unattached males. Even though the former group might be less mobile geographically than the latter, we find that both groups experience roughly the same earnings losses in the long run. Furthermore, the income losses (before tax and after tax) of both groups are also very similar. However, because unattached males have much lower pre-layoff income, they experience much greater relative income shocks than (families of) laid-off husbands. |
| Keywords: | Job Loss; Layoffs; Income instability; Labour supply; Earnings disruption; Employment Insurance benefits; Tax system |
| JEL: | J31 J63 |
| Date: | 2009–09–25 |
| URL: | http://d.repec.org/n?u=RePEc:ubc:clssrn:clsrn_admin-2009-49&r=ias |
| By: | Fullbrook, Edward |
| Abstract: | In 1970 the USA spent 7% of its GNP on healthcare, in 200716%. Whereas the OECD average per capita expenditure on healthcare in 2007 was $2,964, the USA spent $7,290. Yet in that same period, the health of America’s citizens relative to those of other developed countries declined dramatically, so much so that the CIA lists 49 countries whose citizens now can look forward to on average living longer than Americans. This paper looks for the causes of this colossal disparity between expenditure and results. It argues that they are due to the unique economic institutions that, beginning during WWII, have grown up around healthcare in the USA. Because the magnitude of the relative decline in healthcare in the USA is poorly appreciated, especially by Americans, this paper begins with a set of OECD data tables documenting that decline. The main body of the paper is an historical analysis of the institutional economics of American healthcare from 1940 to the present. The paper concludes with a brief consideration of the possibilities for serious reform. |
| Keywords: | USA; health expenditure; health indicators; life expectancy; OECD; obesity; healthcare; American healthcare; HMOs; healthcare reform; medicine; heath insurance; pharmaceutical industry; Obama |
| JEL: | N32 H51 I1 |
| Date: | 2009–10–06 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:17690&r=ias |
| By: | Gianni De Nicoló; John H. Boyd; Elena Loukoianova |
| Abstract: | Many empirical studies of banking crises have employed "banking crisis" (BC) indicators constructedusing primarily information on government actions undertaken in response to bank distress. Weformulate a simple theoretical model of a banking industry which we use to identify and constructtheory-based measures of systemic bank shocks (SBS). Using both country-level and firm-level samples, we show that SBS indicators consistently predict BC indicators based on four major BCseries that have appeared in the literature. Therefore, BC indicatorsactually measure lagged government responses to systemic bank shocks, rather than the occurrence of crises per se. We re-examine the separate impact of macroeconomic factors, bank market structure, deposit insurance, andexternal shocks on the probability of a systemic bank shocks and on the probability of governmentresponses to bank distress. The impact of these variables on the likelihood of a government responseto bank distress is totally different from that on the likelihood of a systemic bank shock.Disentangling the effects of systemic bank shocks and government responses turns out to be crucial inunderstanding the roots of bank fragility. Many findings of a large empirical literature need to be re-assessed and/or re-interpreted. |
| Keywords: | Banking crisis , Banking sector , Banks , Cross country analysis , Deposit insurance , Economic models , External shocks , Financial crisis , |
| Date: | 2009–07–10 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:09/141&r=ias |