nep-ias New Economics Papers
on Insurance Economics
Issue of 2020‒11‒23
fifteen papers chosen by
Soumitra K. Mallick
Indian Institute of Social Welfare and Business Management

  1. Benefit Duration, Job Search Behavior and Re-Employment By Andreas Lichter; Amelie Schiprowski
  2. How Would Medicare for All Affect Health System Capacity? Evidence from Medicare for Some By Jeffrey Clemens; Joshua D. Gottlieb; Jeffrey Hicks
  3. Promoting aging in place through flexible care options: recent developments from the Netherlands By Marianne Tenand; Arjen Hussem; Pieter Bakx
  4. Benefit Duration, Job Search Behavior and Re-Employment By Andreas Lichter; Amelie Schiprowski
  5. Socioeconomic Status and the Experience of Pain: An Example from Knees By David M. Cutler; Ellen Meara; Susan Stewart
  6. NatCats and Insurance in a Developing Economy - New Theoretical and Empirical Evidence By Hott, Christian; Tran, Thi Xuyen
  7. Risk Preferences and Training Investments By Caliendo, Marco; Cobb-Clark, Deborah A.; Obst, Cosima; Uhlendorff, Arne
  8. Job Loss and Health Spillovers in the Family By Gathmann, Christina; Huttunen, Kristiina; Jenström, Laura; Saaksvuori, Lauri; Stitzing, Robin
  9. Productivity Shocks, Long-Term Contracts and Earnings Dynamics By Neele Balke; Thibaut Lamadon
  10. Comrades in the Family? Soviet Communism and Informal Family Insurance By Costa-Font, Joan; Nicinska, Anna
  11. Diagnostic Uncertainty and Insurance Coverage in Credence Goods Markets By Balafoutas, Loukas; Fornwagner, Helena; Kerschbamer, Rudolf; Sutter, Matthias; Tverdostup, Maryna
  12. The Role of Incomplete Information in Shaping Policy Effects: Evidence from Unemployment Insurance By Arni, Patrick; Liu, Xingfei
  13. The Effects of Parental Retirement on Adult Children’s Labor Supply: Evidence From China By Wu, Qi; Gao, Xin
  14. Asymmetric Demand Response when Prices Increase and Decrease: The Case of Child Healthcare By Toshiaki Iizuka; Hitoshi Shigeoka
  15. Dynamiques de consommation dans la crise : les enseignements en temps réel des données bancaires By David Bounie; Youssouf Camara; Etienne Fize; John Galbraith; Camille Landais; Chloé Lavest; Tatiana Pazem; Baptiste Savatier

  1. By: Andreas Lichter; Amelie Schiprowski
    Abstract: This paper studies how the potential duration of unemployment benefits affects early job search behavior and re-employment outcomes. We exploit an unexpected reform of the German unemployment insurance (UI) scheme in 2008, which increased the potential benefit duration from 12 to 15 months for benefit recipients of age 50 to 54. Based on detailed survey data and a difference-in-differences design, we estimate that one additional month of potential benefits reduces early job applications by around 10%. Using social security data, we further find that the extension of benefits increases the average nonemployment duration of individuals entering UI after the reform. Among individuals who got treated at later stages of their unemployment spell, the increased UI coverage does not appear to come at the cost of longer nonemployment. A cautious back-of-the-envelope calculation reveals substantial job finding returns to early search effort.
    Keywords: Unemployment Insurance, Job Search, Re-Employment Outcomes, Natural Experiment
    JEL: D83 I38 J64 J68
    Date: 2020–11
  2. By: Jeffrey Clemens; Joshua D. Gottlieb; Jeffrey Hicks
    Abstract: Proposals to create a national health care plan such as "Medicare for All" rely heavily on reducing the prices that insurers pay for health care. These changes affect physicians' short-run incentives for care provision and may also change health care providers' incentives to invest in capacity, thereby influencing the availability of care in the long term. We provide evidence on these responses using a major Medicare payment change combined with survey data on physicians' time use. We find evidence that physicians increase their time spent on capacity building when remuneration increases, and that they are subsequently more willing to accept new patients---especially those who may be the residual claimants on marginal capacity. These forces imply that short-run supply curves likely differ from long-run supply curves. Policymakers need to account for how major changes to payment incentives would influence the investments that determine health system capacity.
    JEL: H51 I11 I13
    Date: 2020–11
  3. By: Marianne Tenand (Erasmus School of Health Policy and Management |Rotterdam], EsCHER - Erasmus Centre for Health Economics Rotterdam); Arjen Hussem (PGGM); Pieter Bakx (Erasmus School of Health Policy and Management |Rotterdam], EsCHER - Erasmus Centre for Health Economics Rotterdam)
    Abstract: Free choice, ageing in place, financial accessibility and the containment of public spending are focal topics in the public debate about long-term care policies. In order to better balance these objectives, the Netherlands have developed new financing options, in-between between publicly subsidized home care and nursing home care for individuals with moderate to severe care needs. Those may choose to receive either vouchers (PGB), with which they can arrange care themselves, a Full Package at Home (VPT), or a Modular Package at Home (MPT). With VPT and MPT, a comprehensive package of care is provided in-kind, but in theory outside a regular nursing home. Little is known about the role played by these care options. This article describes the design of PGB, VPT and MPT, notably in terms of the cost-sharing between the recipient and the public long-term care insurance. In addition, it leverages aggregate statistics and individual-level administrative data to shed light on the use of these care options. Individuals with more limited care needs and higher-income individuals are more likely to take up these alternative care options, which are suggested to contribute to the development of non-contracted private nursing homes. By favoring the development of a two-tier system, these care options might undermine equity in long-term care receipt and in its financing, which underpins the Dutch social long-term care insurance. The Dutch case illustrates the trade-off between universal access and free choice in care.
    Abstract: Libre choix, maintien à domicile, accessibilité financière et maîtrise des dépenses publiques sont au coeur des débats sur la prise en charge de la dépendance. Afin de mieux concilier ces objectifs, les Pays-Bas ont développé de nouvelles prestations dépendance : les forfaits à domicile (VPT et MPT) et les prestations monétaires (PGB). Celles-ci permettent à la personne âgée de bénéficier d'une prise en charge globale tout en restant théoriquement à son domicile. Le rôle joué par ces nouvelles options de prise en charge est à ce jour peu documenté. Cet article explique leur fonctionnement, notamment du point de vue du partage des coûts entre puissance publique et bénéficiaire, et mobilise différentes sources statistiques (données administratives individuelles et données agrégées) pour éclairer les développements récents. Davantage mobilisés par les moins dépendants mais aussi par les bénéficiaires les plus aisés, ces financements semblent contribuer autant au maintien à domicile qu'au développement d'établissements privés non-conventionnés. En participant au développement d'un système de prise en charge à deux vitesses, ils pourraient remettre en cause l'équité dans la prise en charge et dans son financement qui sous-tend l'assurance sociale dépendance néerlandaise. Le cas des Pays-Bas fournit une illustration de la difficulté à mettre au point des dispositifs permettant de concilier libre choix et universalité de la prise en charge.
    Keywords: Long-term care,Ageing in place,Public financing,Equity,Dépendance des personnes âgées,Maintien à domicile,Financement public,Équité
    Date: 2020–11–02
  4. By: Andreas Lichter; Amelie Schiprowski
    Abstract: This paper studies how the potential duration of unemployment benefits affects individuals' job search behavior and re-employment outcomes. We exploit an unexpected reform of the German unemployment insurance scheme in 2008, which increased the potential benefit duration from 12 to 15 months for recipients of age 50 to 54. Based on detailed survey data and difference-in-differences techniques, we estimate that one additional month of benefits reduces the number of filed applications by around 10% on average over the first two months of unemployment. Treatment effects on the reservation wage are positive but statistically insignificant. In a complementary analysis, we use social security data to investigate how the reform affected re-employment outcomes. The difference-in-differences estimates yield an elasticity of 0.24 (0.1) additional months in unemployment (nonemployment) per additional month of potential benefits. A cautious back-of-the-envelope calculation reveals substantial returns to early search effort.
    Keywords: Unemployment Insurance, Job Search, Re-Employment Outcomes, Natural Experiment
    JEL: D83 I38 J64 J68
    Date: 2020–03
  5. By: David M. Cutler; Ellen Meara; Susan Stewart
    Abstract: Reports of pain differ markedly across socioeconomic groups and are correlated with outcomes such as functional limitations and disability insurance receipt. This paper examines the differential experience of pain by education. We focus on knee pain, the most common musculoskeletal complaint. Comparing clinical interpretation of knee x-rays of people with and without pain, there are few differences in presence or clinical severity of arthritis across education groups. In contrast, less educated people report more pain for any given objective measure of arthritis. After confirming that reported pain maps to objective measures like walking speed and range of motion, we test four theories for differential experience of pain: differences in obesity, physically demanding occupations, psychological factors, and medical treatment differences. We find that physical demands on the job and obesity each explain about one-third of the education gradient in knee pain. There is an interaction between the two; physical requirements on the job are associated with knee pain primarily in those who are obese. In contrast, psychological traits and access to medical care explain little of the difference in reported pain by education level. These findings imply that educational gradients in pain are likely to persist or even widen as the need for physically demanding occupations—like home health aides and personal service workers—grows in importance with the aging population, and the working population continues to be obese.
    JEL: I1 J21
    Date: 2020–10
  6. By: Hott, Christian; Tran, Thi Xuyen
    Abstract: Our paper analyses the effect of natural catastrophes on insurance demand in a developing economy and the specific role of insurance regulation in this relationship. We base our analysis on a theoretical model as well as a panel regression using household survey level data for Vietnam and corresponding spatial measures of natural catastrophes. Vietnam is especially interesting for our analysis as it is strongly affected by natural catastrophes and experienced an enhancement of insurance regulation in recent years. The theoretical results indicate that a loss experience should have a less positive effect in developing economies than in developed economies. In addition, an enhancement of insurance regulation should make the impact of a loss event on insurance demand more positive. These findings are confirmed in our empirical analysis: Overall natural catastrophes decrease insurance demand of affected households in Vietnam. The enhancement of insurance regulation not only increased insurance demand. It also reversed the effect of natural catastrophes on the property insurance demand of affected households.
    Keywords: Insurance Penetration,Natural Catastrophes,Insurance Regulation
    JEL: G22 Q54
    Date: 2020
  7. By: Caliendo, Marco (University of Potsdam); Cobb-Clark, Deborah A. (University of Sydney); Obst, Cosima (University of Potsdam); Uhlendorff, Arne (CREST)
    Abstract: We analyze workers' risk preferences and training investments. Our conceptual frame- work differentiates between the investment risk and insurance mechanisms underpin- ning training decisions. Investment risk leads risk-averse workers to train less; they undertake more training if it insures them against future losses. We use the German Socio-Economic Panel (SOEP) to demonstrate that risk affinity is associated with more training, implying that, on average, investment risks dominate the insurance benefits of training. Crucially, this relationship is evident only for general training; there is no relationship between risk attitudes and specific training. Thus, as expected, risk preferences matter more when skills are transferable – and workers have a vested interest in training outcomes – than when they are not. Finally, we provide evidence that the insurance benefits of training are concentrated among workers with uncertain employment relationships or limited access to public insurance schemes.
    Keywords: human capital investment, work-related training, risk preferences
    JEL: J24 C23 D81
    Date: 2020–10
  8. By: Gathmann, Christina; Huttunen, Kristiina; Jenström, Laura; Saaksvuori, Lauri; Stitzing, Robin
    Abstract: A sizable literature documents that displaced workers suffer substantial negative consequences in the labor market and health. These effects may extend to the partner or spouse through household decision-making. Using administrative data of all workers and firms matched to mortality and patient records, we document a stunning asymmetry: when a man loses his job in a plant closure, both the man and the spouse suffer negative health consequences. When a woman loses here job, in contrast, we find no such dire health consequences. We explore three explanations for this phenomenon: the role of spousal labor supply, the size of earnings and income losses, and the importance of family structure and gender roles. Spousal labor supply responses are very small despite limited insurance through public transfers. The size of income losses and gender roles seem to play a role for explaining the observed asymmetry.
    JEL: I12 I14 J65 J12
    Date: 2020
  9. By: Neele Balke; Thibaut Lamadon
    Abstract: This paper examines how employer- and worker-specific productivity shocks transmit to earnings and employment in an economy with search frictions and firm commitment. We develop an equilibrium search model with worker and firm shocks and characterize the optimal contract offered by competing firms to attract and retain workers. In equilibrium, risk-neutral firms provide only partial insurance against shocks to risk-averse workers and offer contingent contracts, where payments are backloaded in good times and frontloaded in bad times. We prove that there exists a unique spot target wage, which serves as an attraction point for smooth wage adjustments. The structural model is estimated on matched employer-employee data from Sweden. The estimates indicate that firms absorb persistent worker and firm shocks, with respective passthrough values of 27 and 11%, but price permanent worker differences, a large contributor (32%) to variations in wages. A large share of the earnings growth variance can be attributed to job mobility, which interacts with productivity shocks. We evaluate the effects of redistributive policies and find that almost 40% of government-provided insurance is undone by crowding out firm-provided insurance.
    JEL: E24 J31 J41 J64
    Date: 2020–11
  10. By: Costa-Font, Joan (London School of Economics); Nicinska, Anna (Warsaw University)
    Abstract: We study the effect of exposure to communism (EC), a political-economic regime based on collectivist planning, on preferences for family supports, which we refer to as 'informal family insurance'. We exploit both cross-country and cohort variation in EC in a large sample of Central and Eastern European countries (CEEC). Against the backdrop that 'communism gives rise to the abolition of the family', we find robust evidence that EC strengthens the preference for family insurance which coexists with a stronger preference for social insurance. We find a six per cent increase in preferences for care to older parents and a four per cent increase in preferences for support to pre-school children and financial support to adult children. These effects are explained by the erosion of both generalized trust and the lower confidence in public institutions, suggesting that (raising uncertainty and adversity during) communism increased the demand for all types of available insurance.
    Keywords: informal family insurance, family networks, social insurance, interpersonal trust, confidence in institutions, Soviet communism, Eastern Europe
    JEL: Z1 P3
    Date: 2020–11
  11. By: Balafoutas, Loukas (University of Innsbruck); Fornwagner, Helena (University of Regensburg); Kerschbamer, Rudolf (University of Innsbruck); Sutter, Matthias (Max Planck Institute for Research on Collective Goods); Tverdostup, Maryna (University of Innsbruck)
    Abstract: Credence goods markets – like for health care or repair services – with their informational asymmetries between sellers and customers are prone to fraudulent behavior of sellers and resulting market inefficiencies. We present the first model that considers both diagnostic uncertainty of sellers and the effects of insurance coverage of consumers in a unified framework. We test the model's predictions in a laboratory experiment. Both in theory and in the experiment diagnostic uncertainty decreases the rate of efficient service provision and leads to less trade. In theory, insurance also decreases the rate of efficient service provision, but at the same time it also increases the volume of trade, leading to an ambiguous net effect on welfare. In the experiment, the net effect of insurance coverage on efficiency turns out to be positive. We also uncover an important interaction effect: if consumers are insured, experts invest less in diagnostic precision. We discuss policy implications of our results.
    Keywords: credence goods, diagnostic uncertainty, insurance coverage, welfare, model, experiment
    JEL: C91 C72 D82 G22
    Date: 2020–11
  12. By: Arni, Patrick; Liu, Xingfei
    Abstract: Standard program evaluations implicitly assume that individuals are perfectly informed about the considered policy change and the related institutional rules. This seems not very plausible in many contexts, as diverse examples show. However, evidence on how incomplete information affects the size of measured treatment effects is broadly missing. We exploit a unique set of natural experiments to assess the importance of incomplete information in shaping policy effects. We compare different large-scale quasi-experiments on changing potential benefit duration (PBD) in unemployment insurance (UI). Thereby, we confront the benchmark case, in which individuals are fully informed about their different PBD levels, with cases in which job seekers experience a change of their benefit eligibility without being initially informed. However, in any of the considered cases they face exactly the same size of treatment: an increase or decrease of the PBD by 200 days. We identify the treatment effects around the threshold of age 25 where PBD rules change in the considered Swiss UI system. We find substantial differences in the treatment effects across cases with different information conditions on benefit levels. The differences can be rationalized by a model in which individuals invest different amounts of effort to acquire the necessary information. Quantifications of the impact of incomplete information on the PBD effects demonstrate the policy relevance of this usually ignored issue.
    Keywords: asymmetric treatment effects,natural experiment,incomplete information,job search,policy evaluation,unemployment insurance
    JEL: J64 J68 H41 D03 D83 D84
    Date: 2020
  13. By: Wu, Qi; Gao, Xin
    Abstract: Aging and an increasing retired population are a global challenge. Previous studies suggest that retirement affects economic behaviors of the retiree and his or her spouse, including consumption, health outcome, and time use. However, little is known about the intergenerational effects of parental retirement on adult children. This paper studies the effects of parental retirement on adult children's labor supply through intergenerational time and monetary transfer. We exploit the mandatory retirement age in China as the cut-off point and apply a regression discontinuity (RD) approach to four waves of the China Family Panel Studies (CFPS) Dataset. Our findings suggest that parental retirement reduces adult children's annual hours of labor supply by 3 to 4 percent. This reduction is especially pronounced for female children. We find that the reduction can be explained by parents' increasing demand for time and care from children due to the significant drop in parents' self-rated health upon retirement. Although both male and female children increased their monetary and time transfers to parents, we find that parents tend to make more transfers to sons compared to daughters. Daughters are also more likely to make transfers to parents after they retire, both in terms of money and in terms of time. We therefore urge policy makers to increase formal eldercare provisions and provide workplace amenities such as flexible working hours, especially for female employees.
    Keywords: Retirement, Labor Supply, Intergenerational Transfer, Gender Role
    JEL: D13 D64 J0 J22 J26
    Date: 2020–10–23
  14. By: Toshiaki Iizuka; Hitoshi Shigeoka
    Abstract: This study tests whether demand responds symmetrically to price increases and decreases—a seemingly obvious proposition under conventional demand theory that has not been rigorously tested. Exploiting rapid expansion in municipal subsidies for child healthcare in a difference-in-differences framework, we find evidence against it: when coinsurance, our price measure, increases from 0% to 30%, the demand response is more than twice that to a price decrease from 30% to 0%, a result consistent with loss aversion. This result indicates that, while economists and policymakers pay little attention, the price change direction matters, and that welfare analysis should incorporate this direction.
    JEL: I11 I13 I18 J13
    Date: 2020–11
  15. By: David Bounie (IP Paris - Institut Polytechnique de Paris, ECOGE - Economie Gestion - I3, une unité mixte de recherche CNRS (UMR 9217) - Institut interdisciplinaire de l’innovation - CNRS - Centre National de la Recherche Scientifique - X - École polytechnique - Télécom ParisTech - MINES ParisTech - École nationale supérieure des mines de Paris - PSL - Université Paris sciences et lettres, SES - Département Sciences Economiques et Sociales - Télécom ParisTech); Youssouf Camara (Télécom ParisTech); Etienne Fize (Institut d'Études Politiques [IEP] - Paris, CAE - Conseil d'analyse économique); John Galbraith (McGill University = Université McGill [Montréal, Canada]); Camille Landais (LSE - London School of Economics and Political Science); Chloé Lavest (CAE - Conseil d'analyse économique); Tatiana Pazem (LSE - London School of Economics and Political Science); Baptiste Savatier (CAE - Conseil d'analyse économique)
    Abstract: Le contexte inédit de la crise sanitaire a renforcé le besoin de mobiliser des sources de données « en temps réel », c'est‐à‐dire très rapidement disponibles, suffisamment représentatives et détaillées afin de pouvoir décrire les hétérogénéités des situations durant la crise. À ce titre, les données bancaires sont particulièrement riches. Grâce à des partenariats noués entre le CAE et le Groupement des Cartes Bancaires CB, Télécom Paris (dans le cadre de la Chaire « Finance Digitale » placée sous l'égide de la Fondation du Risque en partenariat avec le Groupement Cartes Bancaires CB, Telecom ParisTech et l'Université Panthéon‐Assas), et Crédit Mutuel Alliance Fédérale, que nous remercions tous ,un travail de recherche original a été rendu possible en s'appuyant sur ces données. L'accès à ces données agrégées et strictement anonymisées s'est effectué dans une procédure sécurisée (voir encadré). Les données de transactions par cartes bancaires permettent de construire un baromètre de la consommation des ménages puisqu'elles en couvrent environ 60 % (hors charges fixes). Elles permettent également de produire des analyses sectorielles et géographiques et des hétérogénéités entre les ménages. Les données de comptes bancaires Crédit Mutuel Alliance Fédérale, sur la base d'un échantillon de 300 000 ménages strictement anonymisés, permettent d'aller plus loin dans l'analyse en disposant d'informations sur les dépenses des ménages (achats par cartes bancaires, retraits d'espèces, chèques et prélèvements) et sur les soldes des comptes (compte courant, compte d'épargne, compte titre, assurance vie, crédits). Avec de telles données, il est ainsi possible notamment d'étudier la dynamique de l'épargne globale, et selon différentes catégories de ménages.
    Date: 2020

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