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on Insurance Economics |
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Issue of 2016‒03‒06
fourteen papers chosen by Soumitra K. Mallick Indian Institute of Social Welfare and Business Management |
| By: | Maggie Colby; Sarah Croake |
| Abstract: | The Affordable Care Act opened new and expanded pathways to public health insurance coverage. Since 2014, many states have broadened their eligibility criteria for Medicaid, and have introduced new access points for Medicaid enrollment. |
| Keywords: | insurance coverage, California, Medi-Cal, Health |
| JEL: | I |
| Date: | 2016–02–12 |
| URL: | http://d.repec.org/n?u=RePEc:mpr:mprres:6163bf89443d47baaccc829021995190&r=ias |
| By: | Santeramo, Fabio Gaetano; Adinolfi, Felice; Capitanio, Fabian; Goodwin, Barry K. |
| Abstract: | The factors affecting the demand for agricultural insurance in the US have been extensively studied over the last two decades. However, the determinants of a farm’s entry and exit decisions in the insurance market have received relatively little attention. Turnover in the insurance book of business is an important issue in most private and public crop insurance plans. Moreover, insurance markets in the EU are still largely under-investigated. We investigate empirically the determinants of crop insurance participation in Italy. We show that the participation rate is high for large firms and that it is negatively correlated with crop diversification, which is itself a form of insurance. High premiums tend to inhibit both entry and exit from the insurance market. Larger and wealthier farms are more likely to adopt insurance and renew coverage over time. We discuss implications of our results for public intervention and the private industry. In particular, we demonstrate that the decision to drop coverage by an insured grower may differ significantly from the corresponding decision to enroll in an insurance program by an uninsured farmer. To the extent that policymakers want to encourage participation in subsidized crop insurance programs, education and outreach efforts toward uninsured farmers may differ substantially from those directed toward keeping insured farmers enrolled in the program. We investigate these differences. |
| Keywords: | Agricultural Policy, Risk Management, Insurance, Turnover |
| JEL: | D81 G22 Q12 Q14 Q18 |
| Date: | 2016–01–30 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:69508&r=ias |
| By: | Colman, Gregory (Pace University); Dave, Dhaval M. (Bentley University) |
| Abstract: | One of the main purposes of recent healthcare reform (Patient Protection and Affordable Care Act - ACA) in the U.S. is to enable Americans to make more productive use of their time. We examine how the ACA's dependent care coverage mandate (DCM) affected young adults' time allocation. Based on more accurate measures from the American Time Use Surveys and difference-in-difference methods, we first confirm that the DCM reduced labor supply. The question then arises, what have these adults done with the extra time? We provide some of the first evidence on this issue. Estimates suggest that the DCM has reduced job-lock, as well as the duration of the average doctor's visit, including time spent waiting for as well as receiving medical care, among persons ages 19-25. The latter effect is consistent with substitution from hospital ER utilization to more routine physician care. The extra time has gone into socializing, and to a lesser extent, into educational activities and job search. A related question is whether these changes have made young adults better off. We find that the availability of insurance and change in work time appear to have increased their subjective well-being, enabling them to spend time on activities they view as more meaningful than those they did before insurance became available. |
| Keywords: | health insurance, labor supply, time use, leisure, medical care, Affordable Care Act, waiting time, well-being, work |
| JEL: | I1 J2 H0 |
| Date: | 2016–02 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp9710&r=ias |
| By: | David de Meza; Liza C. Fessner; Diane J. Reyniers |
| Abstract: | Paying an insurance premium but not needing to claim is sometimes viewed as pouring money down the drain. Aversion to the perceived waste may lead to the rejection of fair insurance. Although policies paying rebates if no claim is made are not attractive to expected utility maximisers, this paper finds strong evidence they appeal to waste averters.. |
| Keywords: | Insurance; waste aversion; no-claim rebate; prospect theory |
| JEL: | D8 G22 |
| Date: | 2014–11–22 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:65272&r=ias |
| By: | Rafael Lalive; Camille Landais; Josef Zweimüller |
| Abstract: | We provide evidence that unemployment insurance affects equilibrium conditions in the labor market, which creates significant market externalities. We provide a framework for identification of such equilibrium effects and implement it using the Regional Extension Benefit Program in Austria which extended the duration of UI benefits for a large group of eligible workers in selected regions of Austria. We show that non-eligible workers in REBP regions have higher job finding rates, lower unemployment durations, and a lower risk of long-term unemployment. We discuss the implications of our results for optimal UI policy. |
| Keywords: | unemployment insurance |
| JEL: | H23 J64 |
| Date: | 2015–07–29 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:64566&r=ias |
| By: | Aizawa, Naoki (University of Minnesota); Kim, You Suk (Board of Governors of the Federal Reserve System (U.S.)) |
| Abstract: | We study impacts of advertising as a channel of risk selection in Medicare Advantage. We show evidence that both mass and direct mail advertising are targeted to achieve risk selection. We develop and estimate an equilibrium model of Medicare Advantage with advertising to understand its equilibrium impacts. We find that advertising attracts the healthy more than the unhealthy. Moreover, shutting down advertising increases premiums by up to 40% for insurers that advertised by worsening their risk pools, which further reduces the demand of the unhealthy. We argue that risk selection may make consumers better off by improving insurers' risk pools. |
| Keywords: | Advertising; Health insurance; Medicare; Risk selection |
| Date: | 2015–11–09 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedgfe:2015-101&r=ias |
| By: | Ahrens, Steffen; Nejati, Nooshin; Pfeiffer, Philipp L. |
| Abstract: | This paper studies the role of labor market institutions in business cycle fluctuations. We develop a DSGE model with search and matching frictions and incorporate a US unemployment insurance experience rating system. Layoff taxes based on experience rating finance the cost of unemployment benefits and create considerable employment adjustment costs. Our framework helps realign the search and matching model with the empirical properties of its most salient variables. The model reproduces the negative correlation between vacancies and unemployment, i.e., the Beveridge curve. Simulations show that the model generates more cyclical volatility in its key variable - the ratio of job vacancies to unemployment (labor market tightness). Moreover, layoff taxes reduce the excess sensitivity of job destruction found in Krause and Lubik (2007) and strengthen the negative correlation of job creation and job destruction. Thus, the model matches key labor market data while incorporating an important feature of the US labor market. |
| Keywords: | search and matching,experience rating,unemployment insurance,Beveridge curve |
| JEL: | E24 J64 J65 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:ifwkwp:1988&r=ias |
| By: | Daniel Kuehnle; Christoph Wunder |
| Abstract: | Daylight savings time (DST) represents a public good with costs and benefits. We provide the first comprehensive examination of the welfare effects of the spring and autumn transitions for the UK and Germany. Using individual-level data and a regression discontinuity design, we estimate the effect of the transitions on life satisfaction. Our results show that individuals in both the UK and Germany experience deteriorations in life satisfaction in the first week after the spring transition. We find no effect of the autumn transition. We attribute the negative effect of the spring transition to the reduction in the time endowment and the process of adjusting to the disruption in circadian rhythms. The effects are particularly strong for individuals with young children in the household. We conclude that the higher the shadow price of time, the more difficult is adjustment. Presumably, an increase in flexibility to reallocate time could reduce the welfare loss for individuals with binding time constraints. |
| Keywords: | daylight savings time, life satisfaction, regression discontinuity, UK, Germany |
| JEL: | H41 I31 |
| Date: | 2014–10 |
| URL: | http://d.repec.org/n?u=RePEc:bav:wpaper:156_kuehnlewunder&r=ias |
| By: | Christophette Blanchet-Scalliet (ICJ - Institut Camille Jordan [Villeurbanne] - ECL - École Centrale de Lyon - UCBL - Université Claude Bernard Lyon 1 - Université Jean Monnet - Saint-Etienne - INSA - Institut National des Sciences Appliquées - CNRS - Centre National de la Recherche Scientifique); Etienne Chevalier (LaMME - Laboratoire de Mathématiques et Modélisation d'Evry - CNRS - Centre National de la Recherche Scientifique - Institut national de la recherche agronomique (INRA) - UPEC UP12 - Université Paris-Est Créteil Val-de-Marne - Paris 12 - Université d'Evry-Val d'Essonne - UPD5 - Université Paris Descartes - Paris 5 - ENSIIE); Idriss Kharroubi (CEREMADE - CEntre de REcherches en MAthématiques de la DEcision - CNRS - Centre National de la Recherche Scientifique - Université Paris IX - Paris Dauphine); Thomas Lim (LaMME - Laboratoire de Mathématiques et Modélisation d'Evry - CNRS - Centre National de la Recherche Scientifique - Institut national de la recherche agronomique (INRA) - UPEC UP12 - Université Paris-Est Créteil Val-de-Marne - Paris 12 - Université d'Evry-Val d'Essonne - UPD5 - Université Paris Descartes - Paris 5 - ENSIIE) |
| Abstract: | We study the valuation of variable annuities for an insurer. We concentrate on two types of these contracts that are the guaranteed minimum death benefits and the guaranteed minimum living benefits ones and that allow the insured to withdraw money from the associated account. As for many insurance contracts, the price of variable annuities consists in a fee, fixed at the beginning of the contract, that is continuously taken from the associated account. We use a utility indifference approach to determine this fee and, in particular, we consider the indifference fee rate in the worst case for the insurer i.e. when the insured makes the withdrawals that minimize the expected utility of the insurer. To compute this indifference fee rate, we link the utility maximization in the worst case for the insurer to a sequence of maximization and minimization problems that can be computed recursively. This allows to provide an optimal investment strategy for the insurer when the insured follows the worst withdrawals strategy and to compute the indifference fee. We finally explain how to approximate these quantities via the previous results and give numerical illustrations of parameter sensibility. |
| Keywords: | backward stochastic differential equation,indifference pricing,insurance,Variable annuities,utility maximization,insurance. |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-01017160&r=ias |
| By: | Shantanu Bagchi (Department of Economics, Towson University) |
| Abstract: | I examine how strongly Social Security benefits should be linked to past work-life income, while accounting for the fact that the wealthy live longer than the poor. Using a general equilibrium macroeconomic model calibrated to the U.S. economy, I find that the optimal Social Security arrangement warrants benefits that are flat and completely unrelated to past work-life income. While this arrangement leads to higher implicit tax rates for high-income households, their welfare losses are relatively small, because Social Security's current tax structure is regressive: the marginal tax rate is zero above the taxable maximum. On the other hand, full insurance from unfavorable labor income shocks generates large welfare gains to the low- and medium-income households. Under this flat-benefit arrangement, Social Security benefits increase by as much as a factor of 17 for low-income households, and decline by as much as 40% for high-income households, but the overall size of Social Security remains unchanged. |
| Keywords: | Differential mortality, Social Security, taxable maximum, mortality risk, labor income risk, incomplete markets, general equilibrium. |
| JEL: | E21 E62 H55 |
| Date: | 2016–02 |
| URL: | http://d.repec.org/n?u=RePEc:tow:wpaper:2016-03&r=ias |
| By: | Horioka, Charles Yuji |
| Abstract: | Martin Stuart ("Marty") Feldstein, currently George F. Baker Professor of Economics at Harvard University and President Emeritus of the National Bureau of Economic Research, Inc. (NBER), is an American economist who has made important contributions to public finance, macroeconomics, international economics, social insurance, health economics, the economics of national security, and many other fields of economics, trained a large number of prominent economists, served as President of the National Bureau of Economic Research for some thirty years, and served as President Ronald Reagan's chief economic advisor. |
| Keywords: | Capital accumulation, capital gains tax, charitable giving, Council of Economic Advisors, deadweight loss, economics of national security, euro, European Monetary Union, Feldstein, M., Feldstein-Horioka paradox, Feldstein-Horioka puzzle, health economics, health insurance, home bias, inflation, international capital flows, international capital mobility, investment, National Bureau of Economic Research, pensions, public finance, public pensions, saving, social insurance, social security, tax expenditures, taxation, unemployment compensation, unemployment insurance, Capital accumulation, capital gains tax, charitable giving, Council of Economic Advisors, deadweight loss, economics of national security, euro, European Monetary Union, Feldstein, M., Feldstein-Horioka paradox, Feldstein-Horioka puzzle, health economics, health insurance, home bias, inflation, international capital flows, international capital mobility, investment, National Bureau of Economic Research, pensions, public finance, public pensions, saving, social insurance, social security, tax expenditures, taxation, unemployment compensation, unemployment insurance |
| JEL: | B31 D14 D22 E21 F21 F32 F33 F52 H20 H55 I13 J65 |
| Date: | 2015–03 |
| URL: | http://d.repec.org/n?u=RePEc:agi:wpaper:00000038&r=ias |
| By: | Stephen A. Wandner (Urban Institute and W.E. Upjohn Institute for Employment Research) |
| Abstract: | Wage insurance is a program that attempts to help permanently displaced workers transition to employment rapidly, effectively, and equitably. Because displaced workers have been found to suffer substantial earnings losses when they become reemployed, a wage insurance program provides a temporary wage supplement that partially reduces the wage loss experienced by targeted, newly reemployed workers. While participating workers receive a “wage supplement,” the program is called “wage insurance” because of its design as a social insurance program rather than an income transfer program. This paper provides a discussion of the development of wage insurance as a policy option in the United States and proposals that have had varying goals and designs. |
| Keywords: | wage insurance, unemployment insurance, displaced workers, trade adjustment assistance, earnings losses, wage supplement |
| JEL: | J65 J68 |
| Date: | 2016–01 |
| URL: | http://d.repec.org/n?u=RePEc:upj:weupjo:16-250&r=ias |
| By: | KOBAYASHI Yohei; NAKATA Daigo |
| Abstract: | Although the increase in social security burden is mentioned as a factor for deterring corporate investment and accelerating the hollowing out of Japanese industry, empirical evidence is scarce. This paper empirically examines whether social security contributions affect corporate investment behavior, using firm-level microdata matched with social security insurance data. Our empirical results are summarized as follows. Social security contributions: (1) have a statistically significant negative impact on capital investment; (2) don't affect research and development; and (3) don't influence the corporate decision of starting overseas operation, however, they do affect the foreign direct investment of companies which have already conducted overseas business. |
| Date: | 2016–02 |
| URL: | http://d.repec.org/n?u=RePEc:eti:rdpsjp:16007&r=ias |
| By: | Alger, Ingela; Juarez, Laura; Juarez-Torres, Miriam; Miquel-Florensa, Josepa |
| Abstract: | How does informal risk sharing affect incentives to avoid risk? While moral hazard is expected under formal insurance, theory suggests that the incentive effects of informal risk sharing are ambiguous: internalization of the external effects of transfers on others may reduce or enhance incentives to avoid risk. To study this issue, which is particularly relevant for developing economies, we designed a novel real-effort lab experiment and conducted it in 16 small villages in rural Mexico. We fi nd that subjects internalize the effects of transfers enough for the presence of transfers to signi cantly increase e¤ort compared to autarky situations. |
| Keywords: | informal insurance, effort, moral hazard, free-riding effect, empathy effect |
| JEL: | C93 D64 O12 |
| Date: | 2016–02 |
| URL: | http://d.repec.org/n?u=RePEc:tse:iastwp:30163&r=ias |