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on Insurance Economics |
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Issue of 2022‒04‒11
nineteen papers chosen by Soumitra K. Mallick Indian Institute of Social Welfare and Business Management |
| By: | Kwame Adjei-Mantey (Department of Sustainable Energy and Resources, University of Environment and Sustainable Development, GHANA); Charles Yuji Horioka (Research Institute for Economics and Business Administration, Kobe University, Asian Growth Research Institute, Institute of Social and Economic Research, Osaka University, Institute of Economic Research, Kyoto University, National Bureau of Economic Research, JAPAN) |
| Abstract: | This paper analyzes the determinants of health insurance enrollment and health expenditure in Ghana using micro data from wave 7 of the Ghana Living Standards Survey (GLSS 7) with emphasis on the role of risk preferences and the availability of health facilities in one’s own community, neither of which has been emphasized in the previous literature on this topic. It is possible to analyze the determinants of health insurance enrollment in Ghana because its public health insurance system (the National Health Insurance Scheme or NHIS) is, in theory, mandatory, but is, in actual practice, voluntary, with only about 40% of the population enrolled in the scheme. Our empirical findings show that risk preferences have a significant impact on health insurance enrollment, with risk averse individuals being significantly more likely than other households to enroll in health insurance, as one would expect. Moreover, our findings also show that very poor households are significantly more likely to enroll in health insurance than other households, perhaps because they are exempt from paying premiums for health insurance. This finding suggests that NHIS is achieving its intended objective of increasing the poor’s access to health care. Finally, our findings also show that the availability of health facilities in one’s own community significantly decreases expenditures on health care, which underscores the importance of ensuring an equitable spatial distribution of health facilities throughout the country. |
| Keywords: | Ghana; Health expenditure; Health facilities; Health insurance; Medical insurance; Risk preferences |
| JEL: | D11 D12 D81 I12 I13 |
| Date: | 2022–02 |
| URL: | http://d.repec.org/n?u=RePEc:kob:dpaper:dp2022-01&r= |
| By: | Adjei-Mantey, Kwame; Yuji Horioka, Charles |
| Abstract: | This paper analyzes the determinants of health insurance enrollment and health expenditure in Ghana using micro data from wave 7 of the Ghana Living Standards Survey (GLSS 7) with emphasis on the role of risk preferences and the availability of health facilities in one’s own community, neither of which has been emphasized in the previous literature on this topic. It is possible to analyze the determinants of health insurance enrollment in Ghana because its public health insurance system (the National Health Insurance Scheme or NHIS) is, in theory, mandatory, but is, in actual practice, voluntary, with only about 40% of the population enrolled in the scheme. Our empirical findings show that risk preferences have a significant impact on health insurance enrollment, with risk averse individuals being significantly more likely than other households to enroll in health insurance, as one would expect. Moreover, our findings also show that very poor households are significantly more likely to enroll in health insurance than other households, perhaps because they are exempt from paying premiums for health insurance. This finding suggests that NHIS is achieving its intended objective of increasing the poor’s access to health care. Finally, our findings also show that the availability of health facilities in one’s own community significantly decreases expenditures on health care, which underscores the importance of ensuring an equitable spatial distribution of health facilities throughout the country. |
| Keywords: | Ghana, health expenditure, health facilities, health insurance, medical insurance, risk preferences, D11, D12, D81, I12, I13 |
| Date: | 2022–02 |
| URL: | http://d.repec.org/n?u=RePEc:agi:wpaper:00000194&r= |
| By: | Elira Kuka; Bryan Stuart |
| Abstract: | This paper studies differences in receipt and take-up of unemployment insurance (UI) benefits among White and Black individuals. We combine state-level UI regulations with data containing detailed information on individuals’ work history and UI receipt. Black individuals who separate from a job are 24% less likely to receive UI than White individuals. The UI receipt gap stems primarily from lower take-up of UI benefits among likely eligible individuals, as opposed to differences in benefit eligibility. Statistical decompositions indicate that about one-half of the take-up gap is explained by Black workers’ lower pre-unemployment earnings and higher tendency to live in the South. |
| Keywords: | racial inequality; unemployment insurance; take-up; social insurance |
| JEL: | J15 J65 H5 I38 |
| Date: | 2022–03–24 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedpwp:93868&r= |
| By: | Kwame Adjei-Mantey; Charles Yuji Horioka |
| Abstract: | This paper analyzes the determinants of health insurance enrollment and health expenditure in Ghana using micro data from wave 7 of the Ghana Living Standards Survey (GLSS 7) with emphasis on the role of risk preferences and the availability of health facilities in one’s own community, neither of which has been emphasized in the previous literature on this topic. It is possible to analyze the determinants of health insurance enrollment in Ghana because its public health insurance system (the National Health Insurance Scheme or NHIS) is, in theory, mandatory, but is, in actual practice, voluntary, with only about 40% of the population enrolled in the scheme. Our empirical findings show that risk preferences have a significant impact on health insurance enrollment, with risk averse individuals being significantly more likely than other households to enroll in health insurance, as one would expect. Moreover, our findings also show that very poor households are significantly more likely to enroll in health insurance than other households, perhaps because they are exempt from paying premiums for health insurance. This finding suggests that NHIS is achieving its intended objective of increasing the poor’s access to health care. Finally, our findings also show that the availability of health facilities in one’s own community significantly decreases expenditures on health care, which underscores the importance of ensuring an equitable spatial distribution of health facilities throughout the country. |
| Date: | 2022–02 |
| URL: | http://d.repec.org/n?u=RePEc:dpr:wpaper:1165&r= |
| By: | Francesco Spadafora (Bank of Italy) |
| Abstract: | The Unemployment Insurance (UI) system in the United States has once again played a decisive lifeline role in effectively mitigating the economic and social impact of the Covid-19 pandemic, which prompted an expansion of UI programmes unprecedented in scope, scale and cost. However, the crisis has exposed afresh some well-known challenges for the programme, perhaps best epitomized by the fact that, on the eve of the pandemic, less than one in three unemployed workers collected UI benefits. The objective of this paper is threefold: first, it provides a comprehensive overview of the main structural characteristics of the UI system; second, it compares the role played by UI programmes in mitigating the impact of both the 2008-09 Great Recession and the 2020 Covid-19 pandemic; and third, it discusses the main reform proposals put forth to address the challenges identified for the UI system. The experience with the UI system provides fundamental lessons that can usefully inform the debate on whether and how to introduce a common unemployment insurance scheme in Europe for macroeconomic stabilization. |
| Keywords: | unemployment, unemployment insurance, job acceptance, Covid-19, CARES Act |
| JEL: | E24 H7 J64 J65 |
| Date: | 2022–03 |
| URL: | http://d.repec.org/n?u=RePEc:bdi:opques:qef_673_22&r= |
| By: | Ralph Koijen (University of Chicago); Motohiro Yogo (Princeton University) |
| Abstract: | Variable annuities, which package mutual funds with minimum return guarantees over long horizons, accounted for $1.5 trillion or 35% of U.S. life insurer liabilities in 2015. Sales decreased and fees increased during the global financial crisis, and insurers made guarantees less generous or stopped offering guarantees to reduce risk exposure. These effects persist in the low interest rate environment after the global financial crisis, and variable annuity insurers suffered large equity drawdowns during the COVID-19 crisis. We develop and estimate a model of insurance markets in which financial frictions and market power determine pricing, contract characteristics, and the degree of market completeness. |
| Keywords: | Insurance, Financial Crisis, Risk |
| JEL: | G22 G32 |
| Date: | 2022–03 |
| URL: | http://d.repec.org/n?u=RePEc:pri:econom:2022-3&r= |
| By: | Árpád Ábrahám; João Brogueira de Sousa; Ramon Marimon; Lukas Mayr |
| Abstract: | We study the welfare effects of both existing and counter-factual European unemployment insurance policies using a rich multi-country dynamic general equilibrium model with labour market frictions. The model successfully replicates several salient features of European labor markets, in particular the cross-country differences in the flows between employment, unemployment and inactivity. We find that mechanisms like the recently introduced European instrument for temporary support to mitigate unemployment risks in an emergency (SURE), which allows national governments to borrow at low interest rates to cover expenditures on unemployment benefits, yield sizable welfare gains, contradicting the conventional classical view that costs of business cycles are small. Furthermore, we find that a harmonized benefit system that features a one-time payment of around three quarters of income upon separation is welfare improving in all Eurozone countries relative to the status quo. |
| Keywords: | labour markets, Unemployment Insurance, job creation, job destruction, risk-sharing, Economic Monetary Union |
| JEL: | J6 E2 |
| Date: | 2022–03 |
| URL: | http://d.repec.org/n?u=RePEc:upf:upfgen:1826&r= |
| By: | Pierre Koning (Vrije Universiteit Amsterdam); Paul Muller (Vrije Universiteit Amsterdam); Roger Prudon (Vrije Universiteit Amsterdam) |
| Abstract: | Workers with fixed-term contracts typically have worse health than workers with permanent contracts. We show that these differences in health translate into a substantially higher (30%) risk of applying for disability insurance (DI) in the Netherlands. Using unique administrative data on health and labor market outcomes of all employees in the Netherlands, we decompose this differential into: (i) selection of workers types into fixed-term contracts; (ii) the causal impact of temporary work conditions on worker health; (iii) the impact of differential employer incentives to reintegrate ill workers; and (iv) the differential impact of labor market prospects on the decision to apply for DI benefits. We find that selection actually masks part of the DI risk premium, whereas the causal impact of temporary work conditions on worker health is limited. At the same time, the differences in employer commitment during illness and differences in labor market prospects between fixed-term and permanent workers jointly explain more than 80% of the higher DI risk. |
| Keywords: | Disability Insurance, Temporary Work, Employer Incentives, Worker Health |
| JEL: | H53 J08 I1 |
| Date: | 2022–03–22 |
| URL: | http://d.repec.org/n?u=RePEc:tin:wpaper:20220024&r= |
| By: | Neetu Jain; Deborah Chollet |
| Abstract: | This brief examines the use of telehealth services by Original Medicare and Medicare Advantage beneficiaries both before and during the COVID-19 public health emergency. |
| Keywords: | Medicare, Medicare Advantage, telehealth, telemedicine, public health emergency, payment |
| URL: | http://d.repec.org/n?u=RePEc:mpr:mprres:2e57bcfd272e428598541c90db5ed9be&r= |
| By: | Kristian S. 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 percent during the run and that there is an equal outflow of retail and nonfinancial 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, it is unlikely that deposit insurance would exacerbate moral hazard. Instead, interbank depositors are best positioned for providing “discipline” via short-term funding. |
| Keywords: | bank run; deposit insurance; financial crises |
| JEL: | G01 G21 N20 N24 |
| Date: | 2022–02–01 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fednsr:93785&r= |
| By: | Fieldhouse, Andrew; Howard, Sean; Koch, Christoffer; Munro, David |
| Abstract: | Using newly digitized unemployment insurance claims data we construct a historical monthly unemployment series for U.S. states going back to January 1947. The constructed series are highly correlated with the Bureau of Labor Statics' state-level unemployment data, which are only available from January 1976 onwards, and capture consistent patterns in the business cycle. We use our claims-based unemployment series to examine the evolving pace of post-war unemployment recoveries at the state level. We find that faster recoveries are associated with greater heterogeneity in the recovery rate of unemployment and slower recoveries tend to be more uniformly paced across states. In addition, we find that the pace of unemployment recoveries is strongly correlated with a states' manufacturing share of output. |
| Keywords: | State-Level Unemployment Rates,Unemployment Insurance,Economic Recoveries,Regional Business Cycles |
| JEL: | C82 E24 E32 J64 J65 R11 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:glodps:1066&r= |
| By: | João Brogueira de Sousa; Julián Díaz-Saavedra; Ramon Marimon |
| Abstract: | In an overlapping generations economy with incomplete insurance markets, the introduction of an employment fund -akin to the one introduced in Austria in 2003, also known as 'Austrian backpack'- can enhance production efficiency and social welfare. It complements the two classical systems of public insurance: pay-as-you-go (PAYG) pensions and unemployment insurance (UI). We show this in a calibrated dynamic general equilibrium model with heterogeneous agents of the Spanish economy in 2018. A `backpack' (BP) employment fund is an individual (across jobs) transferable fund, which earns a market interest rate as a return and is financed with a payroll tax (a BP tax). The worker can use the fund while unemployed or retired. Upon retirement, backpack savings can be converted into an (actuarially fair) retirement pension. To complement the existing PAYG pension and UI systems with a welfare maximising 6% BP tax would raise welfare by 0.96% of average consumption at the new steady state, if we model Spain as an open economy. As a closed economy, there are important general equilibrium effects and, as a result, the social value of introducing the backpack is substantially greater: 16.14%, with a BP tax of 18%. In both economies, the annuity retirement option is an important component of the welfare gains. |
| Keywords: | computable general equilibrium, welfare state, social security reform, Retirement |
| JEL: | C68 H55 J26 |
| Date: | 2022–03 |
| URL: | http://d.repec.org/n?u=RePEc:upf:upfgen:1828&r= |
| By: | Brah J. Hershbein (W.E. Upjohn Institute for Employment Research); Bryan A. Stuart (Federal Reserve Bank of Philadelphia) |
| Abstract: | This paper studies how government transfers respond to changes in local economic activity that emerge during recessions. Local labor markets that experience greater employment losses during recessions face persistent relative decreases in earnings per capita. However, these areas also experience persistent increases in transfers per capita, which offset 16 percent of the earnings loss on average. The increase in transfers is driven by unemployment insurance in the short run, and medical, retirement, and disability transfers in the long run. Our results show that nominally place-neutral transfer programs redistribute considerable sums of money to places with depressed economic conditions. |
| Keywords: | recessions, safety net, government transfers, demand shocks, local labor markets, event study |
| JEL: | E32 H50 R12 R28 |
| Date: | 2022–01 |
| URL: | http://d.repec.org/n?u=RePEc:upj:weupjo:22-362&r= |
| By: | April Yanyuan Wu; Denise Hoffman; Paul O'Leary; Dara Lee Luca |
| Abstract: | In this paper, we examine the relationship between self-reported opioid use and employment outcomes among Social Security Disability Insurance (SSDI) applicants. We followed a sample of 2009 applicants to SSDI for four years after the Social Security Administration (SSA) determined their application outcome. We drew our sample from SSA’s Structured Data Repository (SDR) and supplemented the SDR with other SSA administrative data sources that provide information on application outcomes, annual earnings, and deaths. We used a machine-learning method to identify opioids in medication text fields in SDR data. Our analysis addresses two questions: (1) How do employment and earnings patterns differ between SSDI applicants who did and did not use opioids at the time of application? and (2) What is the association between opioid use and employment outcomes among SSDI applicants? We estimated the association between opioid use at application and later employment outcomes through ordinary least squares regression, by using three measures of local opioid availability as instrumental variables and by a reduced-form ordinary least squares regression. Understanding these patterns and associations can improve understanding about the post-application economic well-being of SSDI applicants and may help policymakers identify ways to help this group. |
| Date: | 2022–02 |
| URL: | http://d.repec.org/n?u=RePEc:crr:crrwps:wp2022-01&r= |
| By: | Marta Lachowska (W.E. Upjohn Institute for Employment Research); Alexandre Mas (Princeton University and NBER); Stephen A. Woodbury (Michigan State University and W.E. Upjohn Institute for Employment Research) |
| Abstract: | This paper examines the quality of quarterly records on work hours collected from employers in the State of Washington to administer the unemployment insurance (UI) system, specifically to determine eligibility for UI. We subject the administrative records to four “trials,” all of which suggest the records reliably measure paid hours of work. First, distributions of hours in the administrative records and Current Population Survey outgoing rotation groups (CPS) both suggest that 52–54% of workers work approximately 40 hours per week. Second, in the administrative records, quarter-to-quarter changes in the log of earnings are highly correlated with quarter-to-quarter changes in the log of paid hours. Third, annual changes in Washington’s minimum wage rate (which is indexed) are clearly reflected in year-to-year changes in the distribution of paid hours in the administrative data. Fourth, Mincer-style wage rate and earnings regressions using the administrative data produce estimates similar to those found elsewhere in the literature. |
| Keywords: | unemployment insurance, administrative data, paid work hours, data quality |
| JEL: | C81 H83 J65 |
| Date: | 2022–01 |
| URL: | http://d.repec.org/n?u=RePEc:upj:weupjo:22-361&r= |
| By: | Stefano Eusepi; Christopher G. Gibbs; Bruce Preston |
| Abstract: | We study zero interest-rate policy in response to a large negative demand shock when long-run inflation expectations can fall over time. Because falling expectations make monetary policy less effective by raising real interest rates, the optimal forward guidance policy makes large front-loaded promises to stabilize expectations. Policy is too stimulatory in the event of transitory shocks, but provides insurance against persistent shocks. Optimal policy is well-approximated by a constant calendar-based forward guidance, independent of the shock’s realized persistence. This insurance principle qualitatively and quantitatively distinguishes our paper from other recent research on bounded rationality and the forward guidance puzzle. |
| Keywords: | Optimal Monetary Policy, Learning Dynamics, Expectations Stabilization, Forward Guidance |
| JEL: | E32 D83 D84 |
| Date: | 2022–03 |
| URL: | http://d.repec.org/n?u=RePEc:een:camaaa:2022-26&r= |
| By: | Jung Hur; Haeyeon Yoon |
| Abstract: | Many countries allocate public funds to export credit service—export insurance and loan services. This paper examines the effects of public export credit supports on firms’ global and domestic performance. This study differs from previous studies in that (i) it considers both export loan and insurance from export credit agencies (ECAs) (ii)in a developing country, and (iii) investigates heterogeneous effects by support types and firm characteristics. To construct unique firm-level panel data, this study combines data from two independent ECAs in Korea, each providing export loans and insurance. This paper finds that the effect of financial aids is significant and, more importantly, heterogeneous across support types and firm characteristics—export experience and financial status. The results can be a good reference for developing countries that have more incentives than developed countries to establish or expand ECAs given their weaker financial systems. |
| Date: | 2022–03–04 |
| URL: | http://d.repec.org/n?u=RePEc:bri:uobdis:22/760&r= |
| By: | Mengyi Xu; Jennifer Alonso Garcia; Michael Sherris; Adam Shao |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:ulb:ulbeco:2013/340821&r= |
| By: | Reeves, Aaron; Fransham, Mark; Stewart, Kitty; Patrick, Ruth |
| Abstract: | In this paper, we examine the mental health effects of lowering the UK's benefit cap in 2016. This policy limits the total amount a household with no-one in full-time employment can receive in social security. We treat the reduction in the cap as a natural policy experiment, comparing those at risk of being capped and those who were not, and examining the risk of experiencing poor mental health both before and after the cap was lowered. Drawing on data from ~900,000 individuals, we find that the prevalence of depression or anxiety among those at risk of being capped increased by 2.6 percentage points (95% confidence interval: 1.33–3.88) compared with those at a low risk of being capped. Capping social security may increase the risk of mental ill health and could have the unintended consequence of pushing out-of-work people even further away from the labour market. |
| Keywords: | welfare reform; mental health; benefit cap; social security; DP190101188; WEL/43806; 220206/Z/20/Z |
| JEL: | R14 J01 |
| Date: | 2021–09–08 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:111825&r= |