nep-ias New Economics Papers
on Insurance Economics
Issue of 2013‒11‒16
six papers chosen by
Soumitra K Mallick
Indian Institute of Social Welfare and Business Management

  1. A life-cycle model of unemployment and disability insurance By Sagiri Kitao
  2. A comparative analysis on the relationship between benefits generosity, search requirements and unemployment duration By Lorenzo Corsini
  3. Aid to Jobless Workers in Florida in the Face of the Great Recession: The Interaction of Unemployment Insurance and the Supplemental Nutritional Assistance Program By Peter R. Mueser; Colleen M. Heflin
  4. Liquidity, Risk, and Occupational Choices By Bobba, Matteo; Bianchi, Milo
  5. A Theory of Top Income Taxation and Social Insurance By Francisco M. Gonzalez; Jean-Francois Wen
  6. Assurance maladie en Suisse : les assurances supplémentaires nuisent-elles à la concurrence sur l'assurance de base ? By Dormont, Brigitte; Geoffard, Pierre-Yves; Lamiraud, Karine

  1. By: Sagiri Kitao (Hunter College)
    Abstract: The paper builds a life-cycle model of heterogeneous agents with search frictions, in which individuals choose a sequence of saving and labor supply faced with uncertainty in longevity, employment, health status and medical expenditures. Unemployed individuals decide search intensity and whether to apply for disability insurance (DI) benefits if eligible. We investigate, first, the effects of cash and Medicare benefits of the DI system on the life-cycle pattern of employment. Without in-kind benefits through Medicare, the DI coverage could fall by 30%. Second, the impact of a change in labor market conditions and roles of the DI are studied. A rise in exogenous job separation rates or a fall in job finding rates by 20% each can lead to a drop in employment rate by 1.7 and 2.1 percentage points, respectively. A model without the DI could underestimate the effect on employment by more than 30%.
    Date: 2013
  2. By: Lorenzo Corsini (DISEI, Università degli Studi di Firenze)
    Abstract: We develop a comparative analysis on the effect that unemployment insurance schemes have on unemployment duration. We consider three aspects through which unemployment insurance schemes affect duration: 1) liquidity constraints mitigation from income support can increase duration, 2) employment services at the time of registration can increase initial re-employment probability and 3) employment counseling and monitoring of job search can increase re-employment probability during the whole unemployment spell. We describe how these aspects are present in schemes of various European countries and we assess whether they can explain the overall effect that benefits display on unemployment duration. We perform first a duration analysis and then, to tackle the issue of self-selection into participation, a propensity score matching estimation. The results confirm our interpretation of the three mechanisms so that they effectively concur in the determination of the effect that benefits have on unemployment duration.
    Keywords: unemployment insurance; job search;2unemployment duration; duration analysis; propensity score matching.
    JEL: C41 J64 J65 I38
    Date: 2013
  3. By: Peter R. Mueser (Department of Economics, University of Missouri-Columbia); Colleen M. Heflin
    Abstract: Although many programs redistribute resources in the U.S., two program were central in providing a safety net for those facing hardship during the Great Recession: the Supplemental Nutrition Assistance Program (SNAP), which grew to 47.7 million people in January 2013—or 15.1 percent of all Americans—and the Unemployment Insurance Program (UI), which more than doubled with the onset of the recession, reaching a seasonally adjusted maximum of 6.5 million recipients in June 2009. We examine state administrative data from Florida for SNAP and UI from late 2005 through early 2010. We focus on two research questions: 1. In the face of caseload growth and compositional change in both programs, how has joint participation in UI among SNAP recipients changed? How much of the increase in joint participation is driven by changes in the characteristics of individuals participating in SNAP? How much is driven by the changing economic and policy conditions? 2. How has the role of UI changed for SNAP participants, and in particular how have patterns of combined usage evolved during this period? We find that the number of families relying on both SNAP and UI together ballooned with the Great Recession, and that the patterns changed as expected, with UI growing dramatically in relative importance. At the same time, only a minority of those swelling the ranks of SNAP obtained benefits from the UI program, suggesting that the current safety net has important limitations in times of serious economic distress.
    Keywords: great recession, social insurance, safety net, SNAP, Unemployment Insurance
    JEL: H24 H53 I38 J65
    Date: 2013–10–29
  4. By: Bobba, Matteo; Bianchi, Milo
    Abstract: We explore which financial constraints matter the most in the choice of becoming an entrepreneur. We consider a randomly assigned welfare program in rural Mexico and show that cash transfers signi cantly increase entry into entrepreneurship. We then exploit the cross-household variation in the timing of these transfers and nd that current occupational choices are signi cantly more responsive to the transfers expected for the future than to those currently received. Guided by a simple occu- pational choice model, we argue that the program has promoted entrepreneurship by enhancing the willingness to bear risk as opposed to simply relaxing current liquidity constraints.
    Keywords: insurance; entrepreneurship; Financial constraints; liquidity;
    JEL: O16 G20 L26
    Date: 2013–04
  5. By: Francisco M. Gonzalez (Department of Economics, University of Waterloo); Jean-Francois Wen (Department of Economics, University of Calgary)
    Abstract: The development of the welfare state in the Western economies between 1930 and 1990 coincided with a puzzling pattern in the taxation of top incomes. Effective tax rates at the top increased sharply but then gradually decreased, even as social transfers continued rising. We propose a new theory of the development of the welfare state to explain these facts. Our main insight is that social insurance and top income taxation are substitutes for averting social confl?ict. We emphasize the role of the Great Depression as a source of aggregate risk, and argue that the rise of the welfare state can be understood as a process of exploiting efficiency gains in response to gradual technological improvements in the provision of social insurance. Our detailed arguments build on the policy histories of the United States, Great Britain, and Sweden.
    JEL: D30 H20 H50 P16
    Date: 2013–10
  6. By: Dormont, Brigitte; Geoffard, Pierre-Yves; Lamiraud, Karine
    Abstract: De nombreux pays ont introduit des mécanismes concurrentiels en assurance maladie, tout en instaurant une régulation pour éviter la sélection des risques et garantir une solidarité entre malades et bien portants. Le modèle de la « concurrence régulée » est ainsi appliqué pour l'assurance maladie de base en Suisse, aux Pays-Bas, en Allemagne, en Israël. Il inspire la réforme de l'assurance maladie aux États-Unis. Cet article analyse le fonctionnement d'un tel système en considérant le cas de la Suisse, où l'on s'intéresse aux interférences potentielles entre le marché des assurances supplémentaires et celui de l'assurance de base. L'organisation actuelle de l'assurance maladie en France diffère de celle du système suisse. Mais la question d'une régulation du marché des assurances complémentaires pourrait être posée à terme. Douze ans après l'introduction de la concurrence régulée, les résultats observés en Suisse sont décevants. Bien que les écarts de primes constatés entre les compagnies d'assurance soient très importants, la proportion d'assurés qui changent de caisse reste faible. Tout se passe comme si les assurés ne faisaient pas jouer la concurrence. Notre analyse montre que la faible mobilité des assurés résulte de la coexistence de deux marchés d'assurance maladie soumis à des règles différentes : le marché de l'assurance de base, où la sélection des risques est interdite, et celui de l'assurance supplémentaire, où elle est autorisée. Les estimations montrent que la propension à changer de caisse est beaucoup plus faible chez les détenteurs d'une assurance supplémentaire qui estiment que leur santé n'est pas excellente. Comme il est préférable pour des raisons pratiques d'avoir son assurance de base et son assurance supplémentaire dans la même caisse, il existe un lien de fait entre les deux marchés. Le droit de sélectionner les candidats à la souscription pour l'assurance supplémentaire nuit à la concurrence sur l'assurance de base.
    Keywords: Économie de la santé; Assurance-maladie complémentaire; Assurance maladie;
    JEL: I38 I18
    Date: 2013–05

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