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on Insurance Economics |
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Issue of 2011‒03‒12
four papers chosen by Soumitra K Mallick Indian Institute of Social Welfare and Business Management |
| By: | Pietola, Kyösti; Myyrä, Sami; Niemi, Jarkko K.; van Asseldonk, Marcel |
| Abstract: | This paper analyses investments in green technologies when insurance is also an option. Green technologies are defined to have the power to increase productivity and decrease volatility of future revenues. The insurance options involve the scale and coverage either in a yield insurance or in an index insurance. The stochastic process is a combination of insurable stationary short-run process and non-stationary long run process. The optimal decision rules are solved numerically by stochastic dynamic programming. The results suggest that the index insurance maintains market based incentives to invest in green technologies whereas a yield insurance substantially decreases investments, as expected. An actuarially fair yield insurance decreases investments at high productivity firms. By contrast if the insurance premiums are supported to the extent that the net loading becomes negative, firms with the lowest productivity have strong incentives to collect the benefits of the subsidized insurance rather than invest in higher productivity and lower risks. The yield insurance is the most attractive for low productivity firms while the index insurance is the most attractive for high productivity firms. Nevertheless, the demand for actuarially fair index insurance is reduced also amongst the high productivity firms, when the correlation between the yield and the index falls below 50%. |
| Keywords: | investment, insurance, uncertainty, dynamic programming, green technology, Agribusiness, Agricultural Finance, Financial Economics, Risk and Uncertainty, |
| Date: | 2011–02 |
| URL: | http://d.repec.org/n?u=RePEc:ags:mttfdp:100738&r=ias |
| By: | Feyen, Erik; Lester, Rodney; Rocha, Roberto |
| Abstract: | The insurance sector can play a critical role in financial and economic development. By reducing uncertainty and the impact of large losses, the sector can encourage new investments, innovation, and competition. As financial intermediaries with long investment horizons, insurance companies can contribute to the provision of long-term instruments to finance corporate investment and housing. There is evidence of a causal relationship between insurance sector development and economic growth. However, there have been few studies examining the factors that drive the development of the insurance industry. This paper contributes to the literature by examining the determinants of insurance premiums (both life and non-life premiums) and total assets for a panel of about 90 countries during the period 2000-08. The results show that life sector premiums are driven by per capita income, population size and density, demographic structures, income distribution, the size of the public pension system, state ownership of insurance companies, the availability of private credit, and religion. The non-life sector is affected by these and other variables. While some of these drivers are structural, the results also show that the development of the insurance sector can be influenced by a number of policy variables. |
| Keywords: | Debt Markets,Insurance Law,Emerging Markets,Insurance&Risk Mitigation,Economic Theory&Research |
| Date: | 2011–02–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:5572&r=ias |
| By: | Ek, Susanne (Uppsala Center for Labor Studies); Holmlund, Bertil (Uppsala Center for Labor Studies) |
| Abstract: | A significant fraction of the labor force consists of employed workers who are part-time unemployed (underemployed) in the sense that they are unable to work as much as they prefer. This paper develops a search and matching model to study the design of optimal unemployment insurance in an economy with unemployment as well as part-time unemployment. Part-time unemployment provides income insurance and serves as a stepping stone to full-time jobs. Unemployment benefits for part-timers increase the outflow from unemployment to part-time work but reduce the outflow from part-time work to fulltime employment. We examine the optimal structure of benefits for unemployed and underemployed workers. The results indicate nonnegligible welfare gains associated with time limits for unemployment benefits as well as for part-time benefits. The welfare gains from optimal UI are larger when wages are fixed than when they are flexible. |
| Keywords: | Job search; part-time unemployment; unemployment insurance |
| JEL: | J64 J65 |
| Date: | 2011–02–28 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:uulswp:2011_002&r=ias |
| By: | Guy Lacroix; Marie-Ève Brouard |
| Abstract: | Research on health-related work absenteeism focuses primarily on moral hazard issues but seldom discriminates between the types of illnesses that prompt workers to stay home or seek care. This paper focuses on chronic migraine, a common and acute illness that can prove to be relatively debilitating. Our analysis is based upon the absenteeism of workers employed in a large Fortune-100 manufacturing firm in the United States. We model their daily transitions between work and absence spells between January 1996 up until December 1998. Only absence due to migraine and depression, its main comorbidity, are taken into account. Our results show that there is considerable correlation between the different states we consider. In addition, workers who are covered by the Blue Preferred Provided Organization tend to have shorter employment spells but also shorter migraine spells. |
| Keywords: | Migraine, absenteeism, insurance policies, transition models, unobserved heterogeneity |
| JEL: | I10 J32 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:lvl:lacicr:1108&r=ias |