nep-ias New Economics Papers
on Insurance Economics
Issue of 2012‒04‒17
seven papers chosen by
Soumitra K Mallick
Indian Institute of Social Welfare and Business Management

  1. Unemployment accounts By Setty, Ofer
  2. Separation Without Mutual Exclusion in Financial Insurance By Stephens, Eric; Thompson, James
  3. Financial consequences of falling ill: Changes in the German health insurance system since the 1980s By Wörz, Markus
  4. Estimating income equity in social health insurance system By Galina Besstremyannaya
  5. Unemployment compensation in Germany: Provisions and institutional changes since the 1980s By Wörz, Markus
  6. Job Search Costs and Incentives By Andriy Zapechelnyuk; Ro'i Zultan
  7. Examining the relationship between immigration and unemployment using National Insurance Number registration data By Paolo Lucchino; Chiara Rosazza Bondibene; Jonathan Portes

  1. By: Setty, Ofer
    Abstract: Unemployment Accounts (UA) are mandatory individual saving accounts that can be used by governments as an alternative to the Unemployment Insurance (UI) system. I study a two tier UA-UI system where the unemployed withdraw from their unemployment account until it is exhausted and then receive unemployment benefits. The hybrid policy provides insurance to workers more efficiently than a traditional UI because it provides government benefits selectively. Using a structural model calibrated to the US economy, I find that relative to a two tier UI system the hybrid policy leads to a welfare gain of 0.9%.
    Keywords: Unemployment Accounts; Unemployment Insurance; Job-search; Moral hazard; Mechanism Design; Optimal Policy;
    JEL: E24 J65 J64 E61
    Date: 2012–04–12
  2. By: Stephens, Eric (University of Alberta, Department of Economics); Thompson, James (University of Waterloo)
    Abstract: In traditional economic models of insurance, sellers typically employ a non-linear pricing scheme to elicit type information from buyers. In financial insurance contracts, such a policy is not possible since contracts are non-exclusive. In addition, counterparty risk in financial contracts can be particularly problematic relative to traditional insurance. Accordingly, we relax the standard assumption of contract exclusivity and allow the insured to contract with many sellers, some of which may be unstable. In contrast to the traditional insurance model, we show that separation of risk types among insured parties can be achieved with linear pricing when there is aggregate counterparty risk. This result is shown to collapse when contracts are cleared through a central counterparty, suggesting that such an arrangement can create opacity.
    Keywords: insurance; separation; mutual exclusion; counterparty risk
    JEL: D82 G21 G22
    Date: 2012–04–01
  3. By: Wörz, Markus
    Abstract: The incidence of a health risk may result in two different types of financial consequences: the creation of new needs and the loss of savings and/or income to meet those needs. Illness often requires the purchase of medical help. Although in Germany virtually the entire population is covered by statutory or private health insurance, over time these insurance schemes have become less generous as private out-of-pocket payments continue to rise and, in extreme cases, lead to financial hardship and even poverty. This paper describes the institutional regulations that cover the financial risks of becoming ill and the changes in these regulations since the 1980s. It begins with a structural overview of the German health insurance system, the benefits provided (both in-kind and in-cash) and the evolution of benefits since the 1980s. It then considers the related risk of permanent work-disability and the main institutional means of covering this risk. Here the discussion focuses solely on provisions dealing with loss of income and the changes therein since the 1980s. Aggregate data on short- and long-term illness are then presented to illustrate several effects resulting from changes in institutional rules. The paper concludes with a brief summary of major legislative changes, followed by conclusions and hypotheses about the consequences of occurring risks. --
    Date: 2011
  4. By: Galina Besstremyannaya (Center for Economic and Financial Research at New Economic School)
    Abstract: The paper measures horizontal equity in health care access and utilization in Japan by estimating the coefficients for income groups in a multi-part model which distinguishes between non-users of health care, the users of inpatient and outpatient care. To account for consumer unobservable characteristics, we apply a latent class approach. We address a retransformation problem of logged health care expenditure, using generalized linear models. Our sample is the 2009 data for 4,022 adult consumers (Japan Household Panel Survey). The coefficients for income groups are insignificant both in the binary choice models for inpatient/outpatient health care use, and in the models for health care expenditure. Consumers separate into two latent classes in the generalized linear model for outpatient health care expenditure. Although the results reveal horizontal equity in health care access and utilization in Japan, horizontal inequity remains in health insurance premiums and the prevalence of catastrophic coverage.
    Keywords: health care demand, equity, income elasticity, generalized linear models, latent class, two-part model, four-part model, social health insurance
    JEL: I10 I18 G22 R22
    Date: 2012–04
  5. By: Wörz, Markus
    Abstract: Social protection in case of unemployment has always been a particularly contentious issue. This paper focuses on institutional changes in the unemployment compensation system in Germany since the 1980s. It starts with a description of key features and the structure of the unemployment insurance system. The paper goes on to show how insurance coverage, benefit generosity (in terms of amount and duration of benefits), and eligibility requirements for drawing on unemployment benefits have evolved over time. Nearly all aspects of unemployment benefits have been reduced since the 1980s. An exception to this rule can be seen in the duration of benefits; they were first extended and then subsequently reduced. Elsewhere, the pattern has been of cutbacks. For example, the scope of insurance (measured as the proportion of the labour force being insured) was reduced. This decline, however, was due more to changes in the labour force than to direct government intervention. Replacement rates for unemployment benefits and assistance were cut. In the case of the latter these were transformed into a flat-rate benefit. Finally, regulations regarding eligibility and criteria for qualification and disqualification became increasingly strict. --
    Date: 2011
  6. By: Andriy Zapechelnyuk (Queen Mary, University of London); Ro'i Zultan (Ben-Gurion University of the Negev)
    Abstract: The costs of searching for a job vacancy are typically associated with friction that deters or delays employment of potentially productive individuals. We demonstrate that in a labor market with moral hazard where effort is noncontractible, job search costs play a positive role, whose effect may outweigh the negative implications. As workers are provided incentives to exert effort by the threat of losing their job and having to search for a new vacancy, a reduction in job search costs leads to fewer employees willing to exert effort. The overall lower productivity will make more individuals and firms opting to stay out of the labor market, resulting in lower employment and decreased welfare. Eventually, a reduction of jobs search costs below a certain level results in collapse of the labor market.
    Keywords: : Job search, Moral hazard, Labor market, Unemployment insurance
    JEL: D83 J64 J65
    Date: 2012–04
  7. By: Paolo Lucchino; Chiara Rosazza Bondibene; Jonathan Portes
    Abstract: Immigration has been central in recent UK policy debates and has attracted significant concern over its possible adverse effect on labour market outcomes. This paper contributes to the evidence on this issue by presenting initial results on the impact of migration inflows on the claimant count rate using previously unused data on National Insurance Number registrations of foreign nationals. Our results, which appear robust to different specifications, different levels of geographic aggregation, and to a number of tests, seem to confirm the lack of any impact of migration on unemployment in aggregate. We find no association between migrant inflows and claimant unemployment. In addition, we test for whether the impact of migration on claimant unemployment varies according to the state of the economic cycle. We find no evidence of a more adverse during periods of low growth or the recent recession.
    Date: 2012–01

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