nep-ias New Economics Papers
on Insurance Economics
Issue of 2019‒10‒28
six papers chosen by
Soumitra K. Mallick
Indian Institute of Social Welfare and Business Management

  1. The Impact of the ACA Medicaid Expansion on Disability Program Applications By Lucie Schmidt; Lara Shore-Sheppard; Tara Watson
  2. Understanding Pastoralists’ Dynamic Insurance Uptake Decisions: Evidence from Four-year Panel Data in Ethiopia By Kazushi Takahashi; Yuma Noritomo; Munenobu Ikegami; Nathaniel D. Jensen
  3. Deposit Insurance, Market Discipline and Bank Risk By A.O. Karas; William Pyle; Koen Schoors
  4. Optimal implementation delay of taxation with trade-off for L\'{e}vy risk Processes By Wenyuan Wang; Xueyuan Wu; Cheng Chi
  5. How do Older Workers use Nontraditional Jobs? By Alicia H. Munnell; Geoffrey T. Sanzenbacher; Abigail N. Walters
  6. A multilevel analysis to systemic exposure: insights from local and system-wide information By Y\'erali Gandica; Sophie B\'ereau; Jean-Yves Gnabo

  1. By: Lucie Schmidt (Williams College); Lara Shore-Sheppard (Williams College); Tara Watson (Williams College)
    Abstract: The Affordable Care Act (ACA) expanded the availability of public health insurance, decreasing the relative benefit of participating in disability programs but also lowering the cost of exiting the labor market to apply for disability program benefits. In this paper, we explore the impact of expanded access to Medicaid through the ACA on applications to the Supplemental Security Income (SSI) and Social Security Disability Income (SSDI) programs. Using the fact that the Supreme Court decision of June 2012 made the Medicaid expansion optional for the states, we compare changes in county-level SSI and SSDI caseloads in contiguous county pairs across a state border. We find no significant effects of the Medicaid expansion on applications or awards to either SSI or SSDI, and can reject economically meaningful impacts of Medicaid expansions on applications to disability programs.
    JEL: I10 I13
    Date: 2019–10
  2. By: Kazushi Takahashi (National Graduate Institute for Policy Studies, Tokyo, Japan); Yuma Noritomo (Graduate School of Economics, The University of Tokyo); Munenobu Ikegami (Faculty of Economics, Hosei University); Nathaniel D. Jensen (International Livestock Research Institute)
    Abstract: Using a unique data set covering four years and six semi-annual sales periods of an index-based livestock insurance (IBLI) product in southern Ethiopia, we examine the dynamics of pastoralists’ demand for IBLI. We find that: (1) there is intertemporal dependence of an uptake decision, represented by correlations of unobserved household factors over time; (2) conditional on previous purchase decisions, factors related to continuing the purchase of IBLI to augment existing coverage and replace lapsing contracts differ significantly; (3) controlling for time-invariant household-fixed effects, neither a one-shot subsidy nor the uptake of others in one’s social network influence subsequent demand, whereas less vegetation and reduced insurance premiums induce households to purchase IBLI. Overall, our study provides rigorous micro-evidence to better understand the dynamic uptake of IBLI and signifies the importance of an empirical analysis that takes into account the dynamic demand structure.
    Date: 2019–10
  3. By: A.O. Karas; William Pyle; Koen Schoors
    Abstract: Using evidence from Russia, we explore the effect of the introduction of deposit insurance on bank risk. Drawing on within-bank variation in the ratio of firm deposits to total household and firm deposits, so as to capture the magnitude of the decrease in market discipline after the introduction of deposit insurance, we demonstrate for private, domestic banks that larger declines in market discipline generate larger increases in traditional measures of risk. These results hold in a difference-in-difference setting in which state and foreign-owned banks, whose deposit insurance regime does not change, serve as a control.
    Keywords: deposit insurance, market discipline, moral hazard, risk taking, banks, Russia
    Date: 2019–01
  4. By: Wenyuan Wang; Xueyuan Wu; Cheng Chi
    Abstract: In this paper we consider two problems on optimal implementation delay of taxation with trade-off for spectrally negative L\'{e}vy insurance risk processes. In the first case, we assume that an insurance company starts to pay tax when its surplus reaches a certain level $b$ and at the termination time of the business there is a terminal value incurred to the company. The total expected discounted value of tax payments plus the terminal value is maximized to obtain the optimal implementation level $b^*$. In the second case, the company still pays tax subject to an implementation level $a$ but with capital injections to prevent bankruptcy. The total expected discounted value of tax payments minus the capital injection costs is maximized to obtain the optimal implementation level $a^*$. Numerical examples are also given to illustrate the main results in this paper.
    Date: 2019–10
  5. By: Alicia H. Munnell; Geoffrey T. Sanzenbacher; Abigail N. Walters
    Abstract: Working consistently through one’s fifties and early sixties is key to attaining retirement security. However, workers also need access to retirement plans – so they can continue to accumulate resources – and health insurance – so they can avoid withdrawing assets in the event of a health shock. Yet, despite the fact that a large literature focuses on nontraditional jobs that often lack these benefits, it is unclear how older workers use these jobs and what the consequences are. This paper uses the Health and Retirement Study to identify nontraditional jobs and relies on sequence analysis to explore how workers ages 50-62 use them. The results suggest that the majority of nontraditional jobs are used by workers consistently, and that fewer workers use these jobs briefly or as a bridge to retirement. In the end, workers consistently in nontraditional jobs end up with less retirement income and are also worse off by a more holistic measure of well-being – the incidence of depression. Given this situation, expanding benefits to workers in non-traditional jobs could increase their well-being in retirement.
    JEL: J26 J32
    Date: 2019–10
  6. By: Y\'erali Gandica; Sophie B\'ereau; Jean-Yves Gnabo
    Abstract: In the aftermath of the financial crisis, the growing literature on financial networks has widely documented the predictive power of topological characteristics (e.g. degree centrality measures) to explain the systemic impact or systemic vulnerability of financial institutions. In this work, we show that considering alternative topological measures based on local sub-network environment improves our ability to identify systemic institutions. To provide empirical evidence, we apply a two-step procedure. First, we recover network communities (i.e. close-peer environment) on a spillover network of financial institutions. Second, we regress alternative measures of vulnerability on three levels of topological measures: the global level (i.e. firm topological characteristics computed over the whole system), local level (i.e. firm topological characteristics computed over the community) and aggregated level by averaging individual characteristics over the community. The sample includes $46$ financial institutions (banks, broker-dealers, insurance and real-estate companies) listed in the Standard \& Poor's 500 index. Our results confirm the informational content of topological metrics based on close-peer environment. Such information is different from the one embeds in traditional system wide topological metrics and is proved to be predictor of distress for financial institutions in time of crisis.
    Date: 2019–10

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