nep-ias 2017-01-08 papers

on Insurance Economics

Issue of 2017‒01‒08
nine papers chosen by
Soumitra K. Mallick
Indian Institute of Social Welfare and Business Management

Capturing Benefits from Public Policy Initiatives in India: Inter-Group Differences in Access to and Usage of the Rashtriya Swasthya Bima Yojana Health Insurance Cards By Borooah, Vani; Mishra, Vinod; Naik, Ajaya; Sabharwal, Nidhi
Insurance Between Firms: The Role of Internal Labor Markets By Giacinta Cestone; Chiara Fumagalli; Francis Kramarz; Giovanni Pica
Populism and the Return of the “Paranoid Style”: Some Evidence and a Simple Model of Demand for Incompetence as Insurance against Elite Betrayal By Rafael Di Tella; Julio J. Rotemberg
When the Going Gets Tough... Financial Incentives, Duration of Unemployment and Job-Match Quality Abstract In the aftermath of the Great Recession, the Spanish government reduced the replacement rate (RR) from 60% to 50% after 180 days of unemployment for all spells beginning on July 15, 2012. Using Social Security data and a Differences-in-Differences approach, we find that reducing the RR by 10 percentage points (or 17%) increases workers’ odds of finding a job by at least 41% relative to similar workers not affected by the reform. To put it differently, the reform reduced the mean expected unemployment duration by 5.7 weeks (or 14%), implying an elasticity of 0.86. We find strong behavioral effects as the reform reduced the expected unemployment duration right from the beginning of the unemployment spell. While the reform had no effect on wages, it did not decrease other measures of post-displacement job-match quality. After 15 months, the reform decreased unemployment insurance expenditures by 16%, about half of which are explained by job seekers’ behavioral changes. By Yolanda F. Rebollo-Sanz; Nuria Rodriguez Planas
Optimal Unemployment Insurance and Redistribution By Robin Boadway; Katherine Cuff
Unintended consequences of unemployment insurance legislation: evidence from Brazi By Cristiano Costa Carvalho; Renata Narita
The Power of Social Pensions By Huang, Wei; Zhang, Chuanchuan
To Work for Yourself, for Others, or Not At All? How Disability Benefits Affect the Employment Decisions of Older Veterans By Courtney Coile; Mark Duggan; Audrey Guo
Innovations in Protecting the Old: Mostly Social Insurance and Some Assets By Teresa Ghilarducci

Capturing Benefits from Public Policy Initiatives in India: Inter-Group Differences in Access to and Usage of the Rashtriya Swasthya Bima Yojana Health Insurance Cards

By:	Borooah, Vani; Mishra, Vinod; Naik, Ajaya; Sabharwal, Nidhi
Abstract:	The Rashtriya Swasthya Bima Yojana (RSBY, literally "National Health Insurance Programme"), is a health insurance scheme run by the Indian government for India’s poorest households. The beneficiaries from RSBY belong to different caste and religious groups. In this context, the paper asks two questions. The first is a general question that applies all RSBY card holders – does the possession of a RSBY card benefit the holder in a non-health sphere? The second question is do persons belonging to the dominant groups in Indian society succeed in capturing a disproportionate number of these cards? We attempt to answer these two questions by using a unique survey of 1,500 RSBY card holding households conducted by the authors in two Indian states, Uttar Pradesh and Maharashtra. We conclude that the RSBY poses two barriers: the barriers associated with getting a card and the barriers associated with using a card even though one might be in possession of one. In Maharashtra, those higher up the income ladder, and those in higher social groups, were significantly more likely to have a card than those on the lowest rung economically and socially. The same is true of usage. Having got a card, it was the better off sections of card holders who were more likely to use them.
Keywords:	Health Insurance, Discrimination, India
JEL:	I13
Date:	2015
URL:	http://d.repec.org/n?u=RePEc:pra:mprapa:75692&r=ias

Insurance Between Firms: The Role of Internal Labor Markets

By:	Giacinta Cestone; Chiara Fumagalli; Francis Kramarz; Giovanni Pica
Abstract:	We investigate how Internal Labor Markets (ILMs) allow organizations to accommodate shocks calling for costly labor adjustments. Using data on workers' mobility within French business groups, we find that adverse shocks affecting affiliated firms boost the proportion of workers redeployed to other group units rather than external firms. This effect is stronger when labor regulations are stricter and destination-firms are more efficient or enjoy better growth opportunities. Affiliated firms hit by positive shocks rely on the ILM for new hires, especially high-skilled workers. Overall, ILMs emerge as a co-insurance mechanism within organizations, providing job stability to employees as a by-product.
Keywords:	Internal Labor Markets, Organizations, Business Groups
JEL:	G30 L22 J08 J40
Date:	2016
URL:	http://d.repec.org/n?u=RePEc:baf:cbafwp:cbafwp14162&r=ias

Populism and the Return of the “Paranoid Style”: Some Evidence and a Simple Model of Demand for Incompetence as Insurance against Elite Betrayal

By:	Rafael Di Tella; Julio J. Rotemberg
Abstract:	We present a simple model of populism as the rejection of “disloyal” leaders. We show that adding the assumption that people are worse off when they experience low income as a result of leader betrayal (than when it is the result of bad luck) to a simple voter choice model yields a preference for incompetent leaders. These deliver worse material outcomes in general, but they reduce the feelings of betrayal during bad times. We find some evidence consistent with our model in a survey carried out on the eve of the recent U.S. presidential election. Priming survey participants with questions about the importance of competence in policymaking usually reduced their support for the candidate who was perceived as less competent; this effect was reversed for rural, and less educated white, survey participants.
JEL:	D64 K42 P16
Date:	2016–12
URL:	http://d.repec.org/n?u=RePEc:nbr:nberwo:22975&r=ias

When the Going Gets Tough... Financial Incentives, Duration of Unemployment and Job-Match Quality Abstract In the aftermath of the Great Recession, the Spanish government reduced the replacement rate (RR) from 60% to 50% after 180 days of unemployment for all spells beginning on July 15, 2012. Using Social Security data and a Differences-in-Differences approach, we find that reducing the RR by 10 percentage points (or 17%) increases workers’ odds of finding a job by at least 41% relative to similar workers not affected by the reform. To put it differently, the reform reduced the mean expected unemployment duration by 5.7 weeks (or 14%), implying an elasticity of 0.86. We find strong behavioral effects as the reform reduced the expected unemployment duration right from the beginning of the unemployment spell. While the reform had no effect on wages, it did not decrease other measures of post-displacement job-match quality. After 15 months, the reform decreased unemployment insurance expenditures by 16%, about half of which are explained by job seekers’ behavioral changes.

By:	Yolanda F. Rebollo-Sanz (Department of Economics, Universidad Pablo de Olavide); Nuria Rodriguez Planas (Department of Economics, Queens College, City University of New York (CUNY))
Keywords:	labor supply, financial incentives, unemployment insurance replacement rate, hazard function models, wages and job-match quality, forward-looking non-employed workers, longitudinal social security data
JEL:	C41 J64
Date:	2016–11
URL:	http://d.repec.org/n?u=RePEc:pab:wpaper:16.11&r=ias

Optimal Unemployment Insurance and Redistribution

By:	Robin Boadway (Queen's University); Katherine Cuff (McMaster University)
Abstract:	We characterize optimal income taxation and unemployment insurance in a search-matching framework where both voluntary and involuntary unemployment are endogenous and Nash bargaining determines wages. Individuals differ in utility when voluntarily unemployed (non-participants in the labour market) and decide whether to participate as a job seeker and if so, how much search effort to exert. Unemployment insurance trades off insurance versus moral hazard due to search. We show that it is optimal to have a positive linear wage tax without any redistributive concerns even if search is efficient so the Hosios condition is satisfied. We also allow for different productivity types so there is a redistributive role for the income tax and show that a proportional wage tax internalizes the macro effects arising from endogenous wages. Lump-sum income taxes and transfers can then redistribute between individuals of differing skills and employment states. Our analysis embeds optimal unemployment insurance into an extensive-margin optimal redistribution framework where transfers to the involuntary and voluntary unemployed can differ, and nests several standard models in the literature.
Keywords:	optimal income taxation, unemployment insurance
JEL:	H21 H3 J6
Date:	2016–12
URL:	http://d.repec.org/n?u=RePEc:qed:wpaper:1375&r=ias

Unintended consequences of unemployment insurance legislation: evidence from Brazi

By:	Cristiano Costa Carvalho; Renata Narita
Abstract:	The aim of this study is to investigate whether the probability of Brazilian formal workers being laid-off increases when they are elegible to receive the unemployment insurance. Using the Brazilian Monthly Employment Survey for the largest metropolitan regions, we estimate the e↵ect of a change in the law on the probability of lay-o↵ for the workers eligible to the benefit. The results point out to a 6,8% rise in this probability in comparison to the non-eligible workers.
Keywords:	unemployment insurance; unemployment; informality; labor legislation.
JEL:	J2 J38 J4 J6
Date:	2016–12–07
URL:	http://d.repec.org/n?u=RePEc:spa:wpaper:2016wpecon34&r=ias

The Power of Social Pensions

By:	Huang, Wei (National Bureau of Economic Research); Zhang, Chuanchuan (Central University of Finance and Economics)
Abstract:	This paper examines the impacts of social pension provision among people of different ages. Utilizing the county-by-county rollout of the New Rural Pension Scheme in rural China, we find that, among the age-eligible people, the scheme provision leads to higher household income (18 percent) and food expenditure (10 percent), lower labor supply (6 percent), and better health (11-14 percent). In addition, among the age-ineligible adults, the pension scheme shifts them from farming to non-farming work, lowers insurance participation rate, but does not change income, expenditure or health significantly. Finally, among the children aged below 15, the pension scheme leads to more pocket money received, more caring from grandparents, improved health, and higher schooling rate.
Keywords:	pension, health, elderly
JEL:	E21 H55 I38 O22
Date:	2016–12
URL:	http://d.repec.org/n?u=RePEc:iza:izadps:dp10425&r=ias

To Work for Yourself, for Others, or Not At All? How Disability Benefits Affect the Employment Decisions of Older Veterans

By:	Courtney Coile; Mark Duggan; Audrey Guo
Abstract:	The U.S. Department of Veterans Affairs Disability Compensation (DC) program provides disability benefits to nearly one in five military veterans in the US and its annual expenditures exceed $60 billion. We examine how the receipt of DC benefits affects the employment decisions of older veterans. We make use of variation in program eligibility resulting from a 2001 policy change that increased access to the program for Vietnam veterans who served with “boots on the ground” in the Vietnam theater but not for other veterans of that same era. We find that the policy-induced increase in program enrollment decreased labor force participation and induced a substantially larger switch from wage employment to self-employment. This latter finding suggests that an exogenous increase in income spurred many older veterans to start their own businesses. Additionally, we estimate that one in four veterans who entered the DC program due to this policy change left the labor force, estimates in the same range as those from recent studies of the Social Security Disability Insurance (SSDI) program.
JEL:	J22
Date:	2016–12
URL:	http://d.repec.org/n?u=RePEc:nbr:nberwo:23006&r=ias

Innovations in Protecting the Old: Mostly Social Insurance and Some Assets

By:	Teresa Ghilarducci (Schwartz Center for Economic Policy Analysis (SCEPA))
Abstract:	For the first time in two generations, there’s a growing risk of being poor or near poor in old age because the U.S. pension system has failed. The U.S. pension system is based on a threelayered pyramid, with Social Security on the bottom, employment-based retirement plans in the middle, and personal assets at the top. The second layer has collapsed over the last 35 years as employer-based pensions have shifted years to “do-it-yourself” financial-based accounts anchored in individual asset-building.
Keywords:	Social Security, Inequality, Policy
JEL:	H5 I14 I2
Date:	2016–06
URL:	http://d.repec.org/n?u=RePEc:epa:cepawp:2016-05&r=ias

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