nep-ias New Economics Papers
on Insurance Economics
Issue of 2017‒01‒01
ten papers chosen by
Soumitra K. Mallick
Indian Institute of Social Welfare and Business Management

  1. Health Reform and Health Insurance Coverage of Early Retirees By Helen Levy; Thomas Buchmueller; Sayeh Nikpay
  2. The role of an EMU unemployment insurance scheme on income protection in case of unemployment By Jara Tamayo, Holguer Xavier; Sutherland, Holly; Tumino, Alberto
  3. Earnings-related unemployment security, employment and lifetime income By Määttänen, Niku; Valkonen, Tarmo
  4. The Insurance Premium in the Interest Rates of Interlinked Loans in a Small-scale Fishery By Marie-Catherine Riekhof
  5. Strengthening Enforcement in Unemployment Insurance: A Natural Experiment By Patrick Arni; Amelie Schiprowski
  6. Financial Inclusion and Life Insurance Demand; Evidence from Italian households By Elisa Luciano; Mariacristina Rossi; Dario Sansone
  7. Asset Pricing and Extreme Event Risk: Common Factors in ILS Fund Returns By Ben Ammar, Semir; Braun, Alexander; Eling, Martin
  8. I hope I die before I get old: The supply side of the market for suicide bombers By Apolte, Thomas
  9. Should there be a more active role of family care assistants in long-term care provision? – survey evidence on the view of German citizens By Ivo Bischoff; Nataliya Kusa
  10. The Ages of Women and Men : Life Cycles, Family and Investment in the Fifteenth-Century Low Countries By Zuijderduijn, Jaco

  1. By: Helen Levy (University of Michigan); Thomas Buchmueller (University of Michigan); Sayeh Nikpay (Vanderbilt University)
    Abstract: This paper presents evidence of the dynamics of health insurance coverage between 2008 and 2014 among early retirees, defined as individuals ages 55 to 64 who are not in the labor force. We focus on three questions. First, how did insurance coverage change among early retirees in 2014, when the new ACA options became available, compared with trends in coverage from 2008 to 2013? Second, are there differences between states that did and did not implement the ACA’s Medicaid expansion in January 2014? Third, how did the income gradient in insurance coverage for early retirees change in 2014, both overall and in states with or without Medicaid expansion? We find that between 2013 and 2014, the fraction of early retirees without health insurance declined significantly from 14.7 percent to 11.2 percent, reversing a trend toward increasing uninsurance in recent years. This change was driven by increases in both Medicaid and private non-group coverage. Gains in coverage were larger in states that implemented the Affordable Care Act’s Medicaid expansion in January 2014 than in states that did not. The gains in coverage disproportionately benefited low-income early retirees, and therefore reduced the gradient in coverage with respect to income. There is no evidence of an acceleration of the decline in employer-sponsored coverage for early retirees, either overall or in states that expanded Medicaid. These results suggest that the major coverage provisions of the ACA have increased coverage among early retirees, with particularly large gains among those with very low income in states that expanded Medicaid.
    Date: 2016–09
  2. By: Jara Tamayo, Holguer Xavier; Sutherland, Holly; Tumino, Alberto
    Abstract: The aim of this paper is to explore the potential of an EMU unemployment insurance scheme (EMU-UI) to improve the income protection available to individuals and their families in case of unemployment. Our analysis uses an illustrative EMU-UI scheme, which has a common design across member states and can therefore be considered as a benchmark with respect to which gaps in national unemployment insurance schemes are assessed. We make use of EUROMOD, the EU-wide tax-benefit microsimulation model, to simulate entitlement to the national and EMU-UI and calculate their effect on household disposable income for all individuals currently in work and those with the highest unemployment risk, in case they would become unemployed. Our results show that the EMU-UI has the potential to reduce current gaps in coverage where these are sizeable due to stringent eligibility conditions, to increase generosity where current unemployment benefits are low relative to earnings and to extend duration where this is shorter than twelve months. The illustrative EMU-UI would reduce the risk of poverty for the potentially new unemployed and would have a positive effect on household income stabilization. The extent of these effects varies in size across EMU member states for two main reasons: differences in the design of national unemployment insurance schemes and differences in labor force characteristics across member states.
    Date: 2016–12–19
  3. By: Määttänen, Niku; Valkonen, Tarmo
    Abstract: Earnings-related unemployment benefits weaken markedly the economic incentives for searching and accepting a job. This study estimates that the current Finnish unemployment insurance scheme lowers the number of employed by tens of thousands of persons. The scheme may also weaken the incentives of the firms to create new vacancies and thereby hinder the employment of all unemployed individuals. Moreover, a significant share of the benefits is paid to persons whose lifetime earnings are relatively high. Consequently, limiting the duration of the maximum benefit period is warranted. A cutback of the earnings-related benefits increases the lifetime income disparities somewhat, but notably less than a cutback of basic unemployment allowances.
    Date: 2016–12–21
  4. By: Marie-Catherine Riekhof (ETH Zurich, Switzerland)
    Abstract: Interest payments based on income flows are a common feature of informal loans. Such so-called `interlinked loans' can be seen as an insurance against very low disposable incomes, as interest payments are lowest when income turns out to be low. This paper examines whether interlinked loans indeed contain an insurance premium and how those premia are determined. A simple theoretical model predicts that interest rates of interlinked loans increase with income volatility when insurance premia exist. Based on data from a small-scale fishery in India, calculations show that on average, lenders receive 25% of the income, which corresponds to an average interest rate of 49% p.a.. A panel data analysis confirms theoretical predictions that interlinked loans contain an insurance component paid by the borrowers.
    Keywords: Interlinked loan, Insurance premium, Interest rate, Small-scale fishery, Informal insurance, Informal credit markets, Interlinked contracts, Risk-sharing, India
    JEL: O16 O17 Q22 H23 Q54 O31
    Date: 2016–12
  5. By: Patrick Arni; Amelie Schiprowski
    Abstract: Enforcing the compliance with job search obligations is a core task of conditional benefit systems like unemployment insurance (UI) or welfare. For targeted policy design, it is key to understand how the enforcement regime affects job search outcomes. This paper provides first estimates that separately identify the effects of increasing enforcement strictness in UI. As a natural experiment, we exploit a reform which induced a sharp and unanticipated increase in the probability of being sanctioned after the failure to document job search effort. Using a difference-in-differences design, we find that the probability of job finding within six months increases by 6 percentage points in response to the policy change. This effect comes at the cost of lower job stability. As a consequence, early job finders experience losses in total earnings driven by fewer months in employment within the considered post-unemployment period. We use these estimates to quantify the elasticities to changes in enforcement strictness, trading off the short-run gains (job finding) against the mid-run costs (job quality).
    Keywords: Unemployment Insurance, Job Search, Natural Experiment, Enforcement.
    JEL: J64 J65 J68
    Date: 2016–12–19
  6. By: Elisa Luciano (University of Turin and Collegio Carlo Alberto); Mariacristina Rossi (University of Turin and CeRP-Collegio Carlo Alberto); Dario Sansone (Georgetown University)
    Abstract: This paper studies the demand drivers for life insurance, both lump sum and annuity, using the Bank of Italy (SHIW) panel dataset 2004-2012. We consider both participation and invested amounts. We use stock market participation, home ownership and financial literacy as measure of financial market inclusion. We find that financial inclusion stands as the pivotal regressor in shaping life insurance demand, especially annuities, even when we include pension funds in the definition of annuities. Instead, except gender, the traditional drivers of insurance demand, such as income, wealth, geographical or sociological variables, have a lower impact than financial inclusion. These results are robust to the inclusion of time and individual fixed effects, as well as the IV approach to tackle the potential endogeneity of financial inclusion.
    Date: 2016–01
  7. By: Ben Ammar, Semir; Braun, Alexander; Eling, Martin
    Abstract: The returns of investment funds specializing in insurance-linked securities (ILS) exhibit a unique behavior. We introduce a new peril-based factor model, which explains the time-series and cross-sectional return variation. Despite a strong overall fit, we are left with significantly positive alphas for about one quarter of the funds, some of which can be attributed to beta exposures associated with non-cat-bond ILS. In addition, they are related to fund size, fund age, and performance fees. Although we do not find evidence for market timing abilities, we can rule out pure luck as the source of outperformance by controlling for false discoveries.
    Keywords: Insurance-Linked Securities, Investment Funds, Factor Model, Catastrophe Bonds
    JEL: G13 G22 Q54
    Date: 2016–12
  8. By: Apolte, Thomas
    Abstract: We explore the supply side of the market for suicide bombers. While the strategic edge of suicide attacks for certain terrorist organizations has been thoroughly explored, the motivation of the suppliers remains quite mysterious. Following a review of existing theoretical approaches and empirical findings we develop a model of the supply of suicide bombing, the motivation of which is expressive but time inconsistent. The model implies terrorist organizations to provide a commitment device in exchange for the "services'' of those suicide bombers' that do not suffer from any mental or physical burden of life. By contrast, suicide attackers that do suffer from some sufficiently severe burden of life are not reliant on any commitment device and should therefore be expected to more frequently act as lonesome-wolf attackers.
    JEL: D74 D91 F52 H56
    Date: 2017
  9. By: Ivo Bischoff (University of Kassel); Nataliya Kusa (University of Kassel)
    Abstract: This paper deals with the public acceptance of policies that pave the way for a more active role of family care assistants in long-term care provision. Family care assistants, i.e. non-relatives providing homecare services in the own private home of the care recipient, provide valuable help for adult children organizing long-term care for their parents. However, their support comes at the price of transferring more family-owned wealth to non-relatives. Based on a survey among German citizens, we provide empirical evidence on the factors that drive the support for a more active role of family care assistants. We find support to be higher among subjects who gave long-term care personally. Monetary self-interest is found to matter. In addition, we find evidence of a clear line of conflict: Citizens with alive parents are more likely to support a more active role of family care assistants than citizens whose parents are dead.
    Keywords: long-term care, intergenerational transfers, citizens’ preferences, inheritance taxation, filial responsibility
    JEL: H27 D31 D72
    Date: 2016
  10. By: Zuijderduijn, Jaco (Department of Economic History, Lund University)
    Abstract: Recent literature has suggested how late-medieval families may have used financial markets to navigate the life cycle. Precious little is known about the precise connections between the life cycle and family on the one hand and investments in financial instruments on the other, though. We analyse late-medieval investment behaviour using a new dataset of hundreds of life annuities. Our data give ages at purchase of annuitants as well as the pairings of investors in joint and survivor annuities and thus they allow us to link life-cycle events and family relationships to participation in financial markets. We demonstrate that the late-medieval public did not purchase single life annuities for children and argue this points to contemporaries having preferences other than for maximizing profits. We find that women were prominent investors in life annuities, but they also showed a preference for joint and survivor annuities, which were less profitable but provided insurance for (junior) family members. Finally, although the majority of joint and survivor annuities were purchased by family members, a substantial number were for people who appear not to have been related: we suggest godparenthood may help explain pairings of apparently unrelated adults and children.
    Keywords: life annuities; investment behaviour; financial history
    JEL: D10 D12 E21 G11 N13
    Date: 2016–12–09

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