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on Insurance Economics |
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Issue of 2022‒03‒21
nineteen papers chosen by Soumitra K. Mallick Indian Institute of Social Welfare and Business Management |
| By: | April Yanyuan Wu; Denise Hoffman; Paul O’Leary; Dara Lee Luca |
| Abstract: | This paper examines the relationship between self-reported prescription opioid use and employment outcomes among individuals that applied for Social Security Disability Insurance in 2009. |
| Keywords: | “Social Security Disability Insurance†, SSDI, opioids, employment, earnings, disability |
| URL: | http://d.repec.org/n?u=RePEc:mpr:mprres:8c1b4de21dfe4e9eba586c2fa75a8ec3&r= |
| By: | Bernardus Van Doornik (Banco Central do Brasil); David Schoenherr (Princeton University); Janis Skrastins (Washington University in St. Louis) |
| Abstract: | Exploiting an unemployment insurance (UI) reform in Brazil, we document formal layoff and recall patterns consistent with rent extraction from the UI system. Firms lay off workers just as they become eligible for UI benefits and recall them just when benefits cease. In addition, firms continue to employ some of the formally laid off workers informally. Salary patterns around the reform are consistent with workers sharing rents with firms through lower equilibrium salaries. We estimate that 2.3 to 11.8 percent of UI payments do not fulfill an insurance purpose, but redistribute income to firms and workers who play the system. |
| Keywords: | unemployment insurance, informality, labor supply, rent-seeking |
| JEL: | J21 J22 J46 J65 K31 |
| Date: | 2020–08 |
| URL: | http://d.repec.org/n?u=RePEc:pri:econom:2020-20&r= |
| By: | Bernardus Van Doornik (Banco Central do Brasil); David Schoenherr (Princeton University); Janis Skrastins (Washington University in St. Louis) |
| Abstract: | Exploiting an unemployment insurance (UI) reform in Brazil, we study incentive effects of UI in the presence of informal labor markets. We find that eligibility for UI benefits increases formal layoffs by twelve percent. Most of the additional formal layoffs are related to workers transitioning to informal employment. We further document formal layoff and recall patterns consistent with rent extraction from the UI system. Workers are laid off as they become eligible for UI benefits and recalled just when benefits cease. Salary patterns around the reform are consistent with firms and workers sharing rents through lower equilibrium salaries. |
| Keywords: | unemployment insurance, informality, labor supply, rent-seeking |
| JEL: | J21 J22 J46 J65 K31 |
| Date: | 2020–11 |
| URL: | http://d.repec.org/n?u=RePEc:pri:econom:2020-5&r= |
| By: | Kate Ho (Princeton University); Robin S. Lee (Harvard University) |
| Abstract: | We explore the challenges faced by a large employer designing a health insurance plan menu for its employees. Using detailed administrative data from Harvard University, we estimate a model of plan choice and utilization, and evaluate the benefits of cost sharing and plan variety. For a single plan with a generous out-of-pocket maximum, we find that modest cost sharing of approximately 30% maximizes average employee surplus. Further gains from offering choice are limited if based solely on financial dimensions, but can be economically significant if paired with other features that appeal to sicker households. |
| Keywords: | Health insurance, Health care |
| JEL: | I11 I13 L20 |
| Date: | 2021–01 |
| URL: | http://d.repec.org/n?u=RePEc:pri:econom:2021-63&r= |
| By: | Bernardus Van Doornik (Banco Central do Brasil); Dimas Fazio (National University of Singapore); David Schoenherr (Princeton University); Janis Skrastins (Washington University in St. Louis) |
| Abstract: | We document that a more generous unemployment insurance (UI) system shifts labor supply from safer to riskier firms and reduces compensating wage differentials risky firms need to pay. Consequently, a more generous UI system increases risky firms’ value and fosters entrepreneurship by reducing new firms’ labor costs. Exploiting a UI reform in Brazil that affects only part of the workforce allows us to compare labor supply for workers with different degrees of UI protection within the same firm, sharpening identification of the results. Altogether, our results suggest that UI provides a transfer system from safe to risky firms. |
| Keywords: | unemployment insurance, labor supply, firm risk, entrepreneurship |
| JEL: | J21 J22 J46 J65 K31 |
| Date: | 2022–01 |
| URL: | http://d.repec.org/n?u=RePEc:pri:econom:2022-1&r= |
| By: | Xu, Tao |
| Abstract: | As the ageing population and childlessness are increasing in rural China, social pensions will become the mainstream choice for farmers, and the level of social pensions must be supported by better social insurance. The paper compares the history of rural pension insurance system, outlines the current situation and problems, analyses China Family Panel Studies data and explores the key factors influencing farmers' participation through an empirical approach. The paper shows that residents' social pension insurance is facing problems in the rural areas such as low level of protection and weak management capacity, which have contributed to the under-insured rate, and finds that there is a significant impact on farmers' participation in insurance from personal characteristics factors such as gender, age, health and (family) financial factors such as savings, personal income, intergenerational mobility of funds. And use of the Internet can help farmers enroll in pension insurance. The paper argues for the need to continue to implement the rural revitalisation strategy, with the government as the lead and the market as the support, in a concerted effort to improve the protection and popularity of rural pension insurance. |
| Keywords: | Countryside; Rural pension system; Residents' social insurance; Rural revitalization; Family panel studies |
| JEL: | H5 H53 H55 J1 J2 J6 P2 |
| Date: | 2021–11–20 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:112032&r= |
| By: | Darapheak Tin; Chung Tran |
| Abstract: | We study the nature of lifecycle earnings dynamics by documenting higher-order moments of earnings shocks over the lifecycle, using the Household, Income and Labour Dynamics in Australia (HILDA) Survey 2001-2020. Similar to other countries (e.g. see Guvenen et al. (2021) and De Nardi et al. (2021)), the distribution of earnings shocks in Australia displays negative skewness and excess kurtosis, deviating from the conventional linearity and normality assumptions. However, the sources of fluctuations and the role of family and government insurance are quite different. Wages account more for the dispersion of earnings shocks (second-order risk), while hours drive the negative skewness and excess kurtosis (third- and fourth-order risks, respectively). Wage changes are strongly associated with earnings changes, whereas hour changes are largely absent in upward movement and relatively small in downward movement of earnings changes. Family insurance via pooling income of family members and adjusting labor market activities of secondary earners, and government insurance embedded in the progressive tax and transfer system play distinct roles in reducing risks over age and by income group. Government insurance is more important in mitigating the dispersion of earnings shocks; meanwhile, family insurance is more dominant in mitigating the magnitude and likelihood of extreme and rare shocks. Family insurance interacts with government insurance; however, their joint forces fail to eliminate the non-Gaussian and non-linear features. Furthermore, comparison between groups reveals: (i) the risk equalizing effect of government insurance, and (ii) the persistent nature of risks for certain demographics such as female heads of household and non-parents. Hence, our findings shed new insights into the complexity of earnings dynamics and the importance of family and government insurance. |
| Keywords: | Income dynamics; Earnings risk; Higher-order moments; Non-Gaussian shocks; Family insurance; Government insurance; Inequality |
| JEL: | E24 H24 H31 J31 |
| Date: | 2022–03 |
| URL: | http://d.repec.org/n?u=RePEc:acb:cbeeco:2022-686&r= |
| By: | Stefano Cellini (University of Surrey); Livia Menezes (University of Birmingham); Martin Foureaux Koppensteiner (University of Surrey) |
| Abstract: | In this paper, we estimate the effect of maternal displacements during pregnancy on birth outcomes by leveraging population-level administrative data from Brazil on formal employment linked to birth records. We find that involuntary job separation of pregnant single mothers leads to a decrease in birth weight (BW) by around 28 grams (-1% ca.) and an increase in the incidence of low BW by 10.5%. In contrast, we find a significant positive effect on the mean BW and a decrease in the incidence of low BW for mothers in a marriage or stable union. We document more pronounced negative effects for single mothers with lower earnings and no effect for mothers in the highest income quartile, suggesting a mitigating role of self-insurance from savings. Exploiting variation from unemployment benefits eligibility, we also provide evidence on the mitigating role of formal unemployment insurance using a Regression Discontinuity design exploiting the cutoff from the unemployment insurance eligibility rule. |
| Keywords: | Dismissals, birth outcomes, informal insurance, unemployment insurance |
| JEL: | D14 I10 J65 |
| Date: | 2022–03 |
| URL: | http://d.repec.org/n?u=RePEc:bir:birmec:22-02&r= |
| By: | Stefano Cellini (University of Surrey); Lívia Menezes (University of Birmingham); Martin Foureaux Koppensteiner (University of Surreyj and IZA) |
| Abstract: | In this paper, we estimate the effect of maternal displacements during pregnancy on birth outcomes by leveraging population-level administrative data from Brazil on formal employment linked to birth records. We find that involuntary job separation of pregnant single mothers leads to a decrease in birth weight (BW) by around 28 grams (-1% ca.) and an increase in the incidence of low BW by 10.5%. In contrast, we find a significant positive effect on the mean BW and a decrease in the incidence of low BW for mothers in a marriage or stable union. We document more pronounced negative effects for single mothers with lower earnings and no effect for mothers in the highest income quartile, suggesting a mitigating role of self-insurance from savings. Exploiting variation from unemployment benefits eligibility, we also provide evidence on the mitigating role of formal unemployment insurance using a Regression Discontinuity design exploiting the cutoff from the unemployment insurance eligibility rule. |
| JEL: | D14 I10 J65 |
| Date: | 2022–03 |
| URL: | http://d.repec.org/n?u=RePEc:sur:surrec:0422&r= |
| By: | Natalie Cox (Princeton Unviersity); Peter Ganong (University of Chicago); Pascal Noel (University of Chicago); Joseph Vavra (University of Chicago); Arlene Wong (Princeton University) |
| Abstract: | We use U.S. household-level bank account data to investigate the heterogeneous effects of the pandemic on spending and savings. Households across the income distribution all cut spending from March to early April. Since mid April, spending has rebounded most rapidly for low-income households. We find large increases in liquid asset balances for households throughout the income distribution. However, lower-income households contribute disproportionately to the aggregate increase in balances, relative to their pre-pandemic shares. Taken together, our results suggest that spending declines in the initial months of the recession were primarily caused by direct effects of the pandemic, rather than resulting from labor market disruptions. The sizable growth in liquid assets we observe for low-income households suggests that stimulus and insurance programs during this period likely played an important role in limiting the effects of labor market disruptions on spending. |
| Keywords: | U.S., Northern America, Consumer, Distribution, Households, Income, Income Distribution, Recession, Saving, Pandemic |
| JEL: | D12 D31 E21 E32 E62 G51 I12 |
| Date: | 2020–07 |
| URL: | http://d.repec.org/n?u=RePEc:pri:econom:2020-39&r= |
| By: | Ofeh M. Edoh (Yaounde, Cameroon); Tii N. Nchofoung (University of Dschang, Cameroon); Ofeh E. Anchi (University of Bamenda, Cameroon) |
| Abstract: | This study examines the impact of financial inclusion on household health expenditure in 17 African countries. It argues that financial inclusion is an active influencer of individuals’ health demand and that Gross Domestic Product (GDP) per capita and voluntary health insurance schemes tend to be active transmission channels through which financial inclusion affects household health expenditures. The study used an instrumental variable (2SLS) technique for the analysis over a period from 2008 to 2017.Results from the study show that being financially included leads to increase household health expenditures. Suggestions for policy emerging from this study to governments in Africa are on the aspect of fostering financial inclusion to a wider population alongside enhancing the Universal Health Coverage (UHC) plan to ease the burden of out-of-pocket payments on households. |
| Keywords: | Financial inclusion, Health expenditure, Out-of-pocket (OOP) payments, 2SLS |
| JEL: | G15 I13 C23 |
| Date: | 2021–01 |
| URL: | http://d.repec.org/n?u=RePEc:abh:wpaper:21/080&r= |
| By: | Stanfors, Maria (Department of Economic History, Lund University); Karlsson, Tobias (Department of Economic History, Lund University); Andersson, Lars-Fredrik (Unit of Economic History, Umeå University); Eriksson, Liselotte (Umeå Centre for Gender Studies, Umeå University) |
| Abstract: | Industrialization brought significant economic and social changes. As a response to the risk of income loss due to illness and workplace accidents, mutual health insurance was the main financial vehicle for workers at the turn of the twentieth century across the Western world. We studied individual and firm-level determinants of membership in health insurance societies among male workers in Swedish manufacturing by using matched employer-employee data from the tobacco, printing, and mechanical engineering ndustries. Such data are extremely rare but important for our purpose. They cover all workers (i.e., members and non-members) and firms in a specific year around 1900 (N>12,000). In the years before the first statutory attempts to improve working conditions, we find remarkably high rates of membership, especially in mechanical engineering. We also find an association between membership and age, which is mainly a difference between younger and older adults, but the societies’ egalitarian pricing gave workers no reason to defer enrolment until a higher age related to health problems. Social interaction may explain early membership in the printing and tobacco industries, where we find a positive association between membership among older workers and the enrolment of younger workers. |
| Keywords: | health; health insurance; adverse selection; mutual aid societies; micro data; matched employer-employee data; labour markets; manufacturing industry; industrialization; Sweden; 19th century; 20th century |
| JEL: | I13 N33 N63 |
| Date: | 2022–03–15 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:luekhi:0238&r= |
| By: | Redpath, Connor (University of California, San Diego) |
| Abstract: | I compare mixed-citizenship couple formation under an immigration policy granting spousal visas to one without spousal visas, by leveraging federal same-sex marriage recognition from ending the Defense of Marriage Act. I estimate changes in mixed-citizenship same-sex couple counts and marriage counts, accounting for changes in other same-sex and other mixed-citizenship couples, using a triple difference design. Spousal visa access increases mixed-citizenship coupling by 36%, and mixed-citizenship marriages by 78%. Transfer benefits, health insurance, roommates, moving, or state-level heterogeneity do not explain the results. Informal calculations suggest 1.5 million people are currently together thanks to spousal visas. |
| Date: | 2022–02–11 |
| URL: | http://d.repec.org/n?u=RePEc:osf:socarx:mzuwe&r= |
| By: | Kristian Blickle; Markus K. Brunnermeier; Stephan Luck |
| Abstract: | We use the German Crisis of 1931, a key event of the Great Depression, to study how depositors behave during a bank run in the absence of deposit insurance. We find that deposits decline by around 20% during the run and that there is an equal outflow of retail and non-financial wholesale deposits from both ex-post failing and surviving banks. This implies that regular depositors are unable to identify failing banks. In contrast, the interbank market precisely identifies which banks will fail: the interbank market collapses for failing banks entirely but continues to function for surviving banks, which can borrow from other banks in response to deposit outflows. Since regular depositors appear uninformed, we argue that it is unlikely that deposit insurance would exacerbate moral hazard. Instead, interbank depositors are best positioned for providing “discipline” via short-term funding. |
| JEL: | G20 G21 |
| Date: | 2022–02 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:29753&r= |
| By: | Gareth W. Peters (Statistics & Applied Probability, University of California Santa Barbara); Matteo Malavasi (Actuarial Studies and Business Analytics, Macquarie University, Australia); Pavel V. Shevchenko (Actuarial Studies and Business Analytics, Macquarie University, Australia; Center for Econometrics and Business Analytics, Saint-Petersburg State University, Russia); Georgy Sofronov (Mathematical and Physical Sciences, Macquarie University, Australia); Stefan Tr\"uck (Actuarial Studies and Business Analytics, Macquarie University, Australia); Jiwook Jang (Actuarial Studies and Business Analytics, Macquarie University, Australia) |
| Abstract: | We focus on model risk and risk sensitivity when addressing the insurability of cyber risk. The standard statistical approaches to assessment of insurability and potential mispricing are enhanced in several aspects involving consideration of model risk. Model risk can arise from model uncertainty, and parameters uncertainty. We demonstrate how to quantify the effect of model risk in this analysis by incorporating various robust estimators for key model parameter estimates that apply in both marginal and joint cyber risk loss process modelling. We contrast these robust techniques with standard methods previously used in studying insurabilty of cyber risk. This allows us to accurately assess the critical impact that robust estimation can have on tail index estimation for heavy tailed loss models, as well as the effect of robust dependence analysis when quantifying joint loss models and insurance portfolio diversification. We argue that the choice of such methods is akin to a form of model risk and we study the risk sensitivity that arise from choices relating to the class of robust estimation adopted and the impact of the settings associated with such methods on key actuarial tasks such as premium calculation in cyber insurance. Through this analysis we are able to address the question that, to the best of our knowledge, no other study has investigated in the context of cyber risk: is model risk present in cyber risk data, and how does is it translate into premium mispricing? We believe our findings should complement existing studies seeking to explore insurability of cyber losses. In order to ensure our findings are based on realistic industry informed loss data, we have utilised one of the leading industry cyber loss datasets obtained from Advisen, which represents a comprehensive data set on cyber monetary losses, from which we form our analysis and conclusions. |
| Date: | 2022–02 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2202.10588&r= |
| By: | Velásquez Pinto, Mario D. |
| Abstract: | La crisis provocada por la pandemia de enfermedad por coronavirus (COVID-19) trastocó significativamente las actividades sociales y económicas de todos los países. En este contexto, los seguros de desempleo lograron brindar respuestas rápidas para mantener el ingreso de los hogares ante la pérdida de empleos. En América Latina y el Caribe, ocho países cuentan con un sistema de seguro de desempleo y han modificado sus requisitos o reglas de funcionamiento con el fin de ampliar la duración, suficiencia y cobertura de la protección y reforzar su impacto. De las experiencias analizadas, se desprende la importancia de disponer de una institucionalidad fortalecida que garantice la protección ante la pérdida del empleo de los trabajadores asalariados formales, pero también de contar con otros instrumentos para extender la protección a aquellos trabajadores que se desempeñan en formas de empleo atípicas. |
| Keywords: | DESEMPLEO, COVID-19, VIRUS, EPIDEMIAS, ASPECTOS ECONOMICOS, SEGURO DE DESEMPLEO, ESTUDIOS DE CASOS, POLITICA SOCIAL, SEGURIDAD SOCIAL, UNEMPLOYMENT, COVID-19, VIRUSES, EPIDEMICS, ECONOMIC ASPECTS, UNEMPLOYMENT INSURANCE, CASE STUDIES, SOCIAL POLICY, SOCIAL SECURITY |
| Date: | 2021–12–31 |
| URL: | http://d.repec.org/n?u=RePEc:ecr:col022:47658&r= |
| By: | Leemore Dafny; Kate Ho; Edward Kong |
| Abstract: | Drug copayment coupons to reduce patient cost-sharing have become nearly ubiquitous for high-priced brand-name prescription drugs. Medicare bans such coupons on the grounds that they are kickbacks that induce utilization, but they are commonly used by commercially-insured enrollees. We estimate the causal effects of coupons for branded drugs without bioequivalent generics using variation in coupon introductions over time and comparing differential responses across enrollees in commercial and Medicare Advantage plans. Using data on net-of-rebate prices and quantities from a large Pharmacy Benefits Manager, we find that coupons increase quantity sold by 21-23% for the commercial segment relative to Medicare Advantage in the year after introduction, but do not differentially impact net-of-rebate prices, at least in the short-run. To quantify the equilibrium price effects of coupons, we employ individual-level data to estimate a discrete choice model of demand for multiple sclerosis drugs. We use our demand estimates to parameterize a model of drug price negotiations. For this category of drugs, we estimate that coupons raise negotiated prices by 8% and result in just under $1 billion in increased U.S. spending annually. Combined, the results suggest copayment coupons increase spending on couponed drugs without bioequivalent generics by up to 30 percent. |
| JEL: | I11 I13 L13 |
| Date: | 2022–02 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:29735&r= |
| By: | Andrews, Jeffrey; Borgerhoff Mulder, Monique |
| Abstract: | This paper offers a systematic approach to quantifying the socio-economic role of forests for 'forest-dependent' communities. Focusing on the island of Pemba (Zanzibar, Tanzania), we investigate how forest income contributes to livelihood portfolios, local inequality, and households' insurance against shocks. We also examine how forest income is affected by local institutions and household socio-demographics. We use a series of non-parametric measures in conjunction with multi-level Bayesian models supported by directed acyclic graphs to address these questions. On average, we find that 27% of household income comes from forests, with 83% of that value deriving from fuel products, and that 62% of the total value of forest products are harvested from the agroforestry scrub matrix. At the same time, forest income scales positively with income, forest-dependency scales negatively. Top income earners control ~4 times more forest income than low earners. However, when we consider forestry against other economic sectors, forest income reduces overall income inequality on the island. Despite forests being critical for the poor, we find it offers little insurance against shocks, especially for the vulnerable. In fact, in contrast to expectations, we find that the well-insured are the most likely to increase forest use in response to shocks. Regarding institutions, most forest products come from either government land or land owned by other private individuals, indicating weak tenure institutions on the island. Finally, young, poorly educated male-headed households, which are not integrated into markets, are the most likely to have high forest income. However, female-headed households are generally more dependent due to a lack of alternative income sources. Our results are encouraging as the use of tools from formal causal inference and detailed Bayesian modelling, in conjunction with a quantitative ethnography, build upon previous findings while improving our understanding of local socio-ecological systems. |
| Date: | 2022–02–06 |
| URL: | http://d.repec.org/n?u=RePEc:osf:socarx:z8n3p&r= |
| By: | Jonathan Gruber |
| Abstract: | Designing benefits for the growing platform workforce in the U.S. poses significant challenges. While platform workers need protection against unforeseen shocks, work that is often part time and spread across multiple platforms makes the traditional benefits model untenable. This paper reports the results from a survey of drivers and couriers working with Uber to help understand their benefits preferences. We find that there is a wide diversity across these workers in platform earnings, the share of platform earnings from Uber, the share of family earnings from platform work and the availability of benefits from other jobs. We use willingness-to-pay questions to show that workers are willing to trade off additional income for benefits; after accounting for the tax advantage of benefits, workers are roughly indifferent on average between the two. While there are some trends in valuation, such as higher valuation for pension than for health contributions, the most notable feature of the data is the wide variation across workers in their preferences across benefits types and relative to income. Workers also show a preference for benefits that can help them commit to increase savings in the future. |
| JEL: | I13 J32 J41 |
| Date: | 2022–02 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:29736&r= |