nep-ias New Economics Papers
on Insurance Economics
Issue of 2014‒06‒14
thirteen papers chosen by
Soumitra K Mallick
Indian Institute of Social Welfare and Business Management

  1. Financing Unemployment Insurance By Wayne Vroman; Stephen A. Woodbury
  2. Health Insurance Tax Credits, the Earned Income Tax Credit, and Health Insurance Coverage of Single Mothers By Merve Cebi; Stephen A. Woodbury
  3. Job Displacement Insurance: An Overview By Parsons, Donald O.
  4. Impact of Premium Subsidies on the Take-up of Health Insurance: Evidence from the 2009 American Recovery and Reinvestment Act (ARRA) By Asako S. Moriya; Kosali Simon
  5. Short-term precaution, insurance and saving mechanisms in rural Vietnam By Ha van Dung
  6. Access to Health Insurance and the Use of Inpatient Medical Care: Evidence from the Affordable Care Act Young Adult Mandate By Yaa Akosa Antwi; Asako S. Moriya; Kosali Simon
  7. Effects of interventions to raise voluntary enrollment in a social health insurance scheme : a cluster randomized trial By Capuno, Joseph J.; Kraft, Aleli D.; Quimbo, Stella; Tan, Jr. Carlos R.; Wagstaff, Adam
  8. Household Savings and Productive Capital Formation in Rural Vietnam: Insurance vs. Social Network By Thomas Gries; Ha van Dung
  9. Direct payments, crop insurance and the volatility of farm income. Some evidence in France and in Italy By Geoffroy Enjolras; Fabian Capitanio; Magali Aubert; Felice Adinolfi
  10. The effects of a low interest rate environment on life insurers By Berdin, Elia; Gründl, Helmut
  11. Activation and Active Labour Market Policies in OECD Countries: Stylized Facts and Evidence on their Effectiveness By Martin, John P.
  12. Financial (dis-)information : evidence from an audit study in Mexico By Gine, Xavier; Martinez Cuellar, Cristina; Mazer, Rafael Keenan
  13. Riesgo Agropecuario: Incidencia Económica e Innovaciones para su mitigación. El caso de Argentina. By Miguel, Fusco; Dario, Bacchini; Esteban Otto, Thomasz

  1. By: Wayne Vroman (Urban Institute); Stephen A. Woodbury (W.E. Upjohn Institute for Employment Research)
    Keywords: unemployment insurance, financing, great recession
    JEL: J65
  2. By: Merve Cebi (University of Massachusetts Dartmouth); Stephen A. Woodbury (W.E. Upjohn Institute for Employment Research)
    Keywords: Employment, compensation, health insurance, poverty, inequality, tax policy
    JEL: J3 H2 I3
  3. By: Parsons, Donald O. (George Washington University)
    Abstract: Earnings losses from permanent job separations are a serious threat to the financial security of long-tenured workers. Job displacement insurance is presumably designed to offset these losses, but evidence suggests that consumption smoothing among the long-tenured displaced is seriously incomplete, at least in lightly regulated labor markets. Unemployment and reemployment wage insurance could fully cover these losses, but are costly to provide. Severance pay has emerged as a supplemental, if much criticized, instrument. Moral hazard limitations on unemployment insurance generosity mean that severance pay functions as scheduled (partial) unemployment insurance and scheduled wage insurance. Consumption smoothing over time through savings and borrowing is less efficient than ideal insurance, but may be preferred in second-best situations. Long-tenured separated workers are older on average, which introduces special problems, but also additional policy options, including early access to retirement accounts.
    Keywords: job displacement, unemployment insurance, wage insurance, severance pay, insurance adequacy, early retirement
    JEL: J65 J41 J33 J08
    Date: 2014–05
  4. By: Asako S. Moriya; Kosali Simon
    Abstract: We study the impact of the 65-percent federal health insurance premium subsidy, which aimed to help unemployed workers retain coverage and was in effect from February 2009 to May 2010 through the American Recovery and Reinvestment Act (ARRA). In doing so, we also estimate the price elasticity of demand for health insurance using very recent public policy variation. Our research contributes to the evaluation of the ARRA subsidy’s coverage impact and to a better understanding of consumer responses to subsidized coverage options through the Affordable Care Act. We find that the ARRA subsidy is associated with a 15.2-percent increase in the continuation of employer coverage. This translates into a price elasticity estimate of -0.24, which is towards the middle range of elasticities in existing studies. We also find evidence that part of the increase in the continuation of employer coverage was offset by a decrease in non-group insurance.
    JEL: I13 J64
    Date: 2014–06
  5. By: Ha van Dung (University of Paderborn)
    Abstract: This study investigates the impacts of short-term precautionary selection and insurance on household decisions regarding the participation in different kinds of saving mechanisms in rural Vietnam. The two-part model is employed for the analysis and unlike other studies I investigate household decisions regarding both, participation and contribution to formal and informal saving intermediaries. Furthermore we control for the endogeneity of the short-term precautionary motive and of insurance in the model of household contribution. The finding suggests that the short-term precautionary motive reduces the household probability to engage into formal and informal saving intermediaries. In addition, insurance is found to be a substitute for short-term precautionary savings. Concerning the contribution aspect, the short-term precautionary motive is found to reduce the participant’s deposits in formal saving intermediaries while there is no evidence for insurance in influencing household contribution to saving intermediaries.
    Keywords: Short-term precautionary motive, insurance, saving intermediaries, cash hoarding, deposits
    JEL: O12 O16 O17
    Date: 2014–06
  6. By: Yaa Akosa Antwi; Asako S. Moriya; Kosali Simon
    Abstract: The Affordable Care Act of 2010 expanded coverage to young adults by allowing them to remain on their parent’s private health insurance until they turn 26 years old. While there is evidence on insurance effects, we know very little about use of general or specific forms of medical care. We study the implications of the expansion for the use of inpatient hospitalizations. Given the prevalence of mental health needs for young adults, we also specifically study mental health related inpatient care. We find evidence that compared to those aged 27-29 years, treated young adults aged 19-25 years increased their inpatient visits by 3.5 percent. Visits related to mental illness increased 9.0 percent. The prevalence of uninsurance among hospitalized young adults decreased by 12.5 percent; however, it does not appear that the intensity of inpatient treatment changed despite the change in reimbursement composition of patients.
    JEL: I13
    Date: 2014–06
  7. By: Capuno, Joseph J.; Kraft, Aleli D.; Quimbo, Stella; Tan, Jr. Carlos R.; Wagstaff, Adam
    Keywords: Health Monitoring&Evaluation,Health Systems Development&Reform,Health Economics&Finance,Housing&Human Habitats,Health Law
    Date: 2014–05–01
  8. By: Thomas Gries (University of Paderborn); Ha van Dung (University of Paderborn)
    Abstract: In this paper, we investigate the role of the social network nexus and the insurance nexus in determining household savings and productive capital formation in rural Vietnam. We analyze the issue in two dimensions, stocks and flows, and consider the exposure to negative shocks. The instrumental variable method is employed and unlike previous studies, we account for the endogeneity of all concerned variables. The results indicate that the social network nexus has more impacts in “ex ante” rather than in “ex post” households. In both households groups, the effects of the insurance nexus dominate over those of the social network nexus. In the case of the stocks, we also find that the precautionary view is held in liquid assets but not in productive assets.
    Keywords: rural households, liquid assets, productive assets, social networks, organizations, insurance, disasters
    JEL: O12 O16
    Date: 2014–06
  9. By: Geoffroy Enjolras (CERAG. Centre d'Etudes et de Recherches Appliquées à la Gestion, Université Pierre Mendès-France (Grenoble 2)); Fabian Capitanio (Dipartimiento di Economia e Politica Agraria, Universita degli Studi di Napoli); Magali Aubert (Marchés, Organisations, Institutions et Stratégies d'Acteurs, INRA); Felice Adinolfi (Dipartimento di Scienze Mediche Veterinarie, University of Bologna)
    Abstract: Volatility in farm income represents a major challenge for farm management and for the design of public policies. This paper measures the extent to which risk management tools, especially direct payments and crop insurance, can significantly reduce crop income volatility in France and in Italy. We use an original dataset of 9,555 farms for the period 2003-2007 drawn up from the Farm Accountancy Data Network (FADN) and three different econometric models to explain the volatility of crop income. The results are contrasted between the specialization of the farms and the two countries. Italian farms use management tools (European payments, crop insurance and inputs) to improve their income and reduce its volatility. French farms use the same tools to raise incomes and their volatility and tend to substitute European payments with production. These results question the efficiency of structural policies aimed at stabilizing farmers' incomes.
    Abstract: La volatilité du revenu agricole représente un défi majeur pour la gestion des exploitations et pour la mise au point des politiques publiques. L’objectif de ce travail est d’évaluer dans quelle mesure les instruments de gestion des risques, en particulier les paiements directs et l’assurance agricole, peuvent réduire la volatilité du revenu agricole en France et en Italie. Les données retenues concernent 9555 exploitations et se réfèrent à la période 2003-2007. Elles ont été obtenues à partir du Réseau d’Information Comptable Agricole (RICA) et de trois différents modèles économétriques, élaborés pour expliquer la volatilité du revenu agricole. Les résultats diffèrent considérablement selon le type de spécialisation des exploitations et entre les deux pays. Les exploitations italiennes utilisent des instruments de gestion (paiements européens, assurance agricole et intrants) pour améliorer leur revenu et en réduire la volatilité. Les exploitations françaises utilisent les mêmes instruments pour accroître leur revenu et la volatilité du revenu et tendent à remplacer les paiements européens par la production. Ces résultats amènent à remettre en cause les politiques structurelles visant à stabiliser le revenu des agriculteurs.
    Keywords: volatility, farm income, farm management, insurance, fadn, france, italierevenu agricoleexploitation agricole, assurance agricole, paiement direct, revenu des agriculteurs, réseau d'information comptable agricolevolatilitégestion du risque
    Date: 2014
  10. By: Berdin, Elia; Gründl, Helmut
    Abstract: Low interest rates are becoming a threat to the stability of the life insurance industry, especially in countries such as Germany, where products with relatively high guaranteed returns sold in the past still represent a prominent share of the total portfolio. This contribution aims to assess the effects of the current low interest rate phase on the balance sheet of a representative German life insurer, given the current asset allocation and the outstanding liabilities. To do so, we generate a stochastic term structure of interest rates as well as stock market returns to simulate investment returns of a stylized life insurance business portfolio in a multi-period setting. Based on empirically calibrated parameters, we can observe the evolution of the life insurers' balance sheet over time with a special focus on their solvency situation. To account for different scenarios and in order to check the robustness of our findings, we calibrate different capital market settings and different initial situations of capital endowment. Our results suggest that a prolonged period of low interest rates would markedly affect the solvency situation of life insurers, especially for less capitalized companies, leading to a relatively high probability of default for a subset of companies. --
    Keywords: Life Insurers,Interest Rate Guarantees,Duration Mismatch,Solvency II
    JEL: G22 G23 G17 E58
    Date: 2014
  11. By: Martin, John P. (University College Dublin)
    Abstract: Activation policies aimed at getting working-age people off benefits and into work have become a buzzword in labour market policies. Yet they are defined and implemented differently across OECD countries and their success rates vary too. The Great Recession has posed a severe stress test for these policies with some commentators arguing that they are at best "fair weather" policies. This paper sheds light on these issues mainly via the lens of recent OECD research. It presents the stylized facts on how OECD countries have responded to the Great Recession in terms of ramping up their spending on active labour market policies (ALMPs), a key component in any activation strategy. It then reviews the macroeconomic evidence on the impact of ALMPs on employment and unemployment rates. This is followed by a review of the key lessons from recent OECD country reviews of activation policies. It concludes with a discussion of crucial unanswered questions about activation.
    Keywords: activation, active labour market policies, Great Recession, unemployment insurance, benefit conditionality
    JEL: J01 J08 J68
    Date: 2014–06
  12. By: Gine, Xavier; Martinez Cuellar, Cristina; Mazer, Rafael Keenan
    Abstract: An audit study was conducted in peri-urban Mexico to understand the quality of information and products offered to low-income potential customers. Trained auditors visited multiple financial institutions seeking credit and savings products. Consistent with Gabaix and Laibson (2006), staff voluntarily provides little information about avoidable fees, especially to auditors trained to reveal little knowledge about the market. In addition, clients are almost never offered the cheapest product, most likely because staff is incentivized to offer more expensive products that are thus more profitable to the institution. This suggests that disclosure and transparency policies may be ineffective if they undermine the commercial interest of financial institutions.
    Keywords: Financial Literacy,Access to Finance,Banks&Banking Reform,Insurance&Risk Mitigation,Emerging Markets
    Date: 2014–06–01
  13. By: Miguel, Fusco; Dario, Bacchini; Esteban Otto, Thomasz
    Abstract: The aim of this paper is to summarise a variety of dimensions of agricultural risk in Argentina and to propose different lines of research related to an integrated risk management framework at the macro and micro levels. First, we analyse the incidence of the primary sector in the Argentinean economy, to have one first dimension of the exposure to external shocks. Then, we present some major risks that affect small agricultural producers at a micro level. Finally, we introduce some financial innovations that reduce climate and price risk exposure, such as weather derivatives and index-based insurances.
    Keywords: agricultural risk, macroeconomic vulnerability, financial innovations, index-based insurances
    JEL: E61 G22 Q12 Q14
    Date: 2014–06–03

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