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on Insurance Economics |
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Issue of 2013‒05‒05
eleven papers chosen by Soumitra K Mallick Indian Institute of Social Welfare and Business Management |
| By: | Huang, Pidong |
| Abstract: | This paper considers the design of optimal unemployment insurance with multiple types of job. The environment is an extension of Hopenhayn and Nicolini(1997). We study the model by using the fi�rst-order approach. The optimal contract still displays benefit� decreasing over the length of the unemployment spell. The wage tax after reemployment depends on the length of unemployment spell. |
| Keywords: | Unemployment insurance |
| JEL: | J01 |
| Date: | 2013–04–15 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:46626&r=ias |
| By: | Laun, Tobias (Department of Economics, Uppsala University); Wallenius, Johanna (Dept. of Economics, Stockholm School of Economics) |
| Abstract: | In this paper we study the role of social insurance, namely old-age pensions, disability insurance and healthcare, in accounting for the differing labor supply patterns of older individuals across OECD countries. To this end, we develop a life cycle model of labor supply and health with heterogeneous agents. The key features of the framework are: (1) people choose when to stop working, and when/if to apply for disability and pension benefits, (2) the awarding of disability insurance benefits is imperfectly correlated with health, and (3) people can partially insure against health shocks by investing in health, the cost of which is dependent on health insurance coverage. We find that the incentives faced by older workers differ hugely across countries. In fact, based solely on differences in social insurance programs, the model predicts even more cross-country variation in the employment rates of people aged 55-64 than we observe in the data. |
| Keywords: | Life cycle; Retirement; Disability insurance; Health |
| JEL: | E24 J22 J26 |
| Date: | 2013–04–25 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:hastef:0744&r=ias |
| By: | Ermanno Celeste Tortia (University of Trento; University of Turin and Namur, Belgium; University of Naples, Federico II) |
| Abstract: | The standard explanation of wage rigidity in principal agent and in efficiency wage models is related to worker risk-aversion. However, these explanations do not consider at least two important classes of empirical evidence: (1) In worker cooperatives workers appear to behave in a less risk averse way than in for profit firms and to accept fluctuating wages; (2) The emerging experimental evidence on the employment contract shows that most workers prefer higher but more uncertain wages to lower fixed wages. Workers do not appear to express a preference for fixed wages in all situations and different ownership forms, in our case worker cooperatives and for-profit firms, behave in different ways when dealing with the trade-off between wage rigidity and employment fluctuations. More specifically, worker cooperatives are characterized, in relative terms, by fixed employment levels and fluctuating wages, while for-profit firms are characterized by fixed wages and fluctuating employment. Our paper reinterprets these stylized facts by focusing on the relationship between wage rigidity and worker risk aversion in light of the presence of employer post contractual opportunism. Contractual incompleteness and private information on the side of the employer can compound in favouring the pursuit of the employer's objectives, when they diverge from the employee's ones. The idea of employer moral hazard is able to disentangle the observed behavioural differences in different ownership forms. By resorting to the standard efficiency wage framework, we show that, in the presence of employer moral hazard, employees in capitalistic firms generally prefer fixed wage, accepting this way a positive risk of lay-off. On the contrary, one of the main functions of fluctuating wages in worker cooperatives is to minimize the risk of lay-off. |
| Keywords: | risk aversion; employer contract; moral hazard; asymmetric information; hidden action; risk aversion; income insurance; employment insurance; worker cooperatives |
| Date: | 2013–02 |
| URL: | http://d.repec.org/n?u=RePEc:ent:wpaper:wp46&r=ias |
| By: | Angelov, Nikolay (IFAU - Institute for Evaluation of Labour Market and Education Policy); Johansson, Per (IFAU - Institute for Evaluation of Labour Market and Education Policy); Lindahl, Erica (IFAU - Institute for Evaluation of Labour Market and Education Policy) |
| Abstract: | This study investigates possible reasons for the gender difference in sickness absence. We estimate both short- and long-term effects of parenthood in a within-couple analysis based on the timing of parenthood. We find that after entering parenthood, women increase their sickness absence by between 0.5 days per month (during the child's third year) and 0.85 days per month (during year 17) more than their spouse. By investigating possible explanations for the observed effect, we conclude that the effect mainly stems from higher home commitment, which reduces women's labour market attachment and, in turn, increases female sickness absence. |
| Keywords: | Double burden; health investment; household work; labour market work; moral hazard; parenthood; sickness insurance; work absence |
| JEL: | C23 D13 I19 J22 |
| Date: | 2013–04–17 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:ifauwp:2013_009&r=ias |
| By: | John Schmitt; Janelle Jones |
| Abstract: | A series of earlier CEPR reports documented a substantial decline over the last three decades in the share of “good jobs” in the U.S. economy. This fall-off in job quality took place despite a large increase in the educational attainment and age of the workforce, as well as the productivity of the average U.S. worker. This report evaluates the likely impact of several policies that seek to address job quality, including universal health insurance, a universal retirement system (over and above Social Security), a large increase in college attainment, a large increase in unionization, and gender pay equity. |
| Keywords: | good jobs, retirement, pensions, health insurance, wages, labor, education, bad jobs, gender, pay equity |
| JEL: | J J3 J31 J32 J38 J5 J1 J11 J15 I I2 I24 I25 |
| Date: | 2012–07 |
| URL: | http://d.repec.org/n?u=RePEc:epo:papers:2013-09&r=ias |
| By: | Leonardo Becchetti (University of Rome ÒTor VergataÓ); Stefano Castriota (University of Rome ÒTor VergataÓ); Pierluigi Conzo (University of Naples "Federico II" &CSEF) |
| Abstract: | The poor in developing countries are the most exposed to natural catastrophes and microfinance organizations may potentially ease their economic recovery. Yet, no evidence on MFIs strategies after natural disasters exists. We aim to fill this gap with a database which merges bank records of loans, issued before and after the 2004 Tsunami by a Sri Lankan MFI recapitalized by Western donors, with detailed survey data on the corresponding borrowers. Evidence of effective post-calamity intervention is supported since the defaults in the post-Tsunami years (2004-2006) do not imply smaller loans in the period following the recovery (2007-2011) while Tsunami damages increase their size. Furthermore, a cross-subsidization mechanism is in place: clients with a long successful credit history (and also those not damaged by the calamity) pay higher interest rates. All these features helped damaged people to recover and repay both new and previous loans. However, we also document an abnormal and significant increase in default rates of non victims suggesting the existence of contagion and/or strategic default problems. For this reason we suggest reconversion of donor aid into financial support to compulsory micro insurance schemes for borrowers. |
| Keywords: | Tsunami, disaster recovery, microfinance, strategic default, contagion, microinsurance |
| JEL: | G21 G32 G33 |
| Date: | 2012–07 |
| URL: | http://d.repec.org/n?u=RePEc:ent:wpaper:wp43&r=ias |
| By: | Nicole Woo; Dean Baker |
| Abstract: | Americans pay far higher prices for prescription drugs than do people in other wealthy countries. The reason that other countries spend so much less on drugs is that their governments negotiate prices with the pharmaceutical industry. The United States government could adopt the same approach with the Medicare drug program and use its market leverage to negotiate the same, or even lower, prices as are paid by other wealthy nations. This issue brief finds the potential savings to states would be enormous, cumulatively between $31 billion and $73 billion over 10 years, and also each state individually could expect significant savings. California leads the way, with potential savings between $3.3 and $7.8 billion. The next six top-saving states are Florida, New York, Texas, Pennsylvania, Ohio and Illinois, all with projected savings of at least $1 billion per year. Even those states with the least potential savings, such as Wyoming, North Dakota and Vermont, would still save tens of millions of dollars over a decade. |
| Keywords: | Medicare, medicare drug benefit, prescription drug, Dean Baker, hospital insurance, pharmaceutical industry, private insurers |
| JEL: | I I1 I14 I18 I3 I38 H |
| Date: | 2013–03 |
| URL: | http://d.repec.org/n?u=RePEc:epo:papers:2013-08&r=ias |
| By: | Alisdair McKay; Ricardo Reis |
| Abstract: | Most countries have automatic rules in their tax-and-transfer systems that are partly intended to stabilize economic fluctuations. This paper measures how effective they are. We put forward a model that merges the standard incomplete-markets model of consumption and inequality with the new Keynesian model of nominal rigidities and business cycles, and that includes most of the main potential stabilizers in the U.S. data, as well as the theoretical channels by which they may work. We find that the conventional argument that stabilizing disposable income will stabilize aggregate demand plays a negligible role on the effectiveness of the stabilizers, whereas tax-and-transfer programs that affect inequality and social insurance can have a large effect on aggregate volatility. However, as currently designed, the set of stabilizers in place in the United States has barely had any effect on volatility. According to our model, expanding safety-net programs, like food stamps, has the largest potential to enhance the effectiveness of the stabilizers. |
| JEL: | E32 E62 H30 |
| Date: | 2013–04 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:19000&r=ias |
| By: | Antonio Diez de los Rios |
| Abstract: | This paper proposes a novel regression-based approach to the estimation of Gaussian dynamic term structure models that avoids numerical optimization. This new estimator is an asymptotic least squares estimator defined by the no-arbitrage conditions upon which these models are built. We discuss some efficiency considerations of this estimator, and show that it is asymptotically equivalent to maximum likelihood estimation. Further, we note that our estimator remains easy-to-compute and asymptotically efficient in a variety of situations in which other recently proposed approaches lose their tractability. We provide an empirical application in the context of the Canadian bond market. |
| Keywords: | Asset Pricing; Econometric and statistical methods; Interest rates |
| JEL: | E43 C13 G12 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:bca:bocawp:13-10&r=ias |
| By: | Cette, G.; de Jong, M. |
| Abstract: | The inflation and the real yield component deduced from inflation-linked and nominal bond prices are adversely affected by two market effects: price distortions due to certain market-related events and oil price movements. Their underlying time-correlation without those effects is stable and positive. Market data analysis carried out on the world’s major bond markets gives valuable new insight into the long-debated relationship between inflation and growth prospects. |
| Keywords: | inflation-linked bonds, breakeven inflation, Fisher hypothesis, Brent. |
| JEL: | E43 G15 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:bfr:banfra:433&r=ias |
| By: | Werner Roeger; Jan in 't Veld |
| Abstract: | This paper uses a two region DSGE model for the Euro area (periphery vs. core), to analyse the costs of higher sovereign risk premia, the so called 'sovereign risk channel'. We highlight the importance of valuation effects of sovereign bonds in bank balance sheets for the transmission of sovereign default expectations to the private sector. While at the current juncture the fiscal multiplier is larger in the EA periphery, we show that for highly indebted countries in the EA no fiscal consolidation could have more detrimental effects if it leads to expectations of sovereign default. In our view these results provide useful additional information for the debate on fiscal austerity which focusses mainly on the size of the multiplier. |
| JEL: | E62 E32 E62 G21 H63 F41 |
| Date: | 2013–04 |
| URL: | http://d.repec.org/n?u=RePEc:euf:ecopap:0479&r=ias |