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on Insurance Economics |
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Issue of 2008‒03‒01
three papers chosen by Soumitra K Mallick Indian Institute of Social Welfare and Bussiness Management |
| By: | Malcolm Anderson (Centre for Health Economics, Monash University); Jeff Richardson (Centre for Health Economics, Monash University); John McKie (Centre for Health Economics, Monash University); Angelo Iezzi (Centre for Health Economics, Monash University) |
| Date: | 2007–10 |
| URL: | http://d.repec.org/n?u=RePEc:mhe:cherps:2007-23&r=ias |
| By: | Laczó, Sarolta |
| Abstract: | This paper examines the effects of income inequality in a risk sharing model with limited commitment, that is, when insurance agreements have to be self-enforcing. In this context, numerical dynamic programming is used to examine three questions. First, I consider heterogeneity in mean income, and study the welfare effects when inequality together with aggregate income increases. Second, subsistence consumption is introduced to see how it affects consumption smoothing. Finally, income is endogenized by allowing households to choose between two production technologies, to look at the importance of consumption insurance for income smoothing. |
| Keywords: | risk sharing; limited commitment; inequality; technology choice; developing countries |
| JEL: | I30 D80 O12 |
| Date: | 2008–02 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:7197&r=ias |
| By: | Stephen B. DeLoach (Department of Economics, Elon University); Jennifer M. Platania (Department of Economics, Elon University) |
| Abstract: | Employer-financed health insurance systems, like that used in the United States, distort firms' labor demand and adversely affect the economy. Since such costs vary with employment rather than hours worked, firms have an incentive to increase output by increasing worker hours rather than employment. Given that the returns to employment exceed the returns to hours worked, this results in lower levels of employment and output. In this paper we construct a heterogeneous agent general equilibrium model where individuals differ with respect to their productivity and employment opportunities. Calibrating the model to the U.S. economy, we generate steady state results for several alternative models for financing health insurance: one in which health insurance is financed primarily through employer contributions that vary with employment; a second where insurance is funded through a non-distortionary, lump-sum tax; and a third where insurance is funded by a payroll tax. We measure the effects of each of the alternatives on output, employment, hours worked and inequality. |
| JEL: | E62 O41 C68 |
| Date: | 2008–02 |
| URL: | http://d.repec.org/n?u=RePEc:elo:wpaper:2008-04&r=ias |