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on Insurance Economics |
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Issue of 2012‒02‒01
five papers chosen by Soumitra K Mallick Indian Institute of Social Welfare and Business Management |
| By: | Jacopo Bonan; Oliver Dagnelie; Philippe LeMay-Boucher; Michel Tenikue |
| Abstract: | In Senegal mutual health organizations (MHOs) have been present in the greater region of Thiès for years. Despite their benefits, in some areas there remain low take-up rates. We offer an insurance literacy module, communicating the benefits from health microinsurance and the functioning of MHOs, to a randomly selected sample of households in the city of Thiès. The effects of this training, and three cross-cutting marketing treatments, are evaluated using a randomized control trial. We find that the insurance literacy module has no impact, but that our marketing treatment has a significant effect on the take up decisions of households. |
| Keywords: | Community based health insurance scheme, Randomized control trials, Africa, Senegal |
| JEL: | C93 O17 |
| Date: | 2012–01 |
| URL: | http://d.repec.org/n?u=RePEc:mib:wpaper:216&r=ias |
| By: | Bruno Biais (Toulouse School of Economics (CNRS-CRM, IDEI), 21 Allée de Brienne, 31000 Toulouse, France.); Florian Heider (European Central Bank, Kaiserstrasse 29, D-60311 Frankfurt am Main, Germany.); Marie Hoerova (European Central Bank, Kaiserstrasse 29, D-60311 Frankfurt am Main, Germany.) |
| Abstract: | We analyze optimal hedging contracts and show that although hedging aims at sharing risk, it can lead to more risk-taking. News implying that a hedge is likely to be loss-making undermines the risk-prevention incentives of the protection seller. This incentive problem limits the capacity to share risks and generates endogenous counterparty risk. Optimal hedging can therefore lead to contagion from news about insured risks to the balance sheet of insurers. Such endogenous risk is more likely to materialize ex post when the ex ante probability of counterparty default is low. Variation margins emerge as an optimal mechanism to enhance risk-sharing capacity. Paradoxically, they can also induce more risk-taking. Initial margins address the market failure caused by unregulated trading of hedging contracts among protection sellers. JEL Classification: G21, G22, D82. |
| Keywords: | Insurance, moral hazard, counterparty risk, margin requirements, derivatives. |
| Date: | 2012–01 |
| URL: | http://d.repec.org/n?u=RePEc:ecb:ecbwps:20111413&r=ias |
| By: | Christian Merkl, Thijs van Rens |
| Abstract: | Firms select not only how many, but also which workers to hire. Yet, in standard search models of the labor market, all workers have the same probability of being hired. We argue that selective hiring crucially affects welfare analysis. Our model is isomorphic to a search model under random hiring but allows for selective hiring. With selective hiring, the positive predictions of the model change very little, but the welfare costs of unemployment are much larger because unemployment risk is distributed unequally across workers. As a result, optimal unemployment insurance may be higher and welfare is lower if hiring is selective |
| Keywords: | labor market models, welfare, optimal unemployment insurance |
| JEL: | E24 J65 |
| Date: | 2012–01 |
| URL: | http://d.repec.org/n?u=RePEc:kie:kieliw:1752&r=ias |
| By: | Bartels, Charlotte |
| Abstract: | Welfare states redistribute both between individuals (inter-individual redistribution) reducing annual, cross-sectional inequality and over the lifecycle of an individual (intra-individual redistribution) insuring individuals against income risks in the long-term. But studies measuring redistribution often focus on a one-year period and the second aspect is neglected. To quantify both inter- and intra-individual redistribution in Germany this study uses SOEP data from 1984 to 2009 to construct long-term incomes over a 20-year period. Results show that annual, cross-sectional inequality is higher than inequality in the long-run, but the effect of redistribution is also larger annually than in the long-term. Depending on age the distributional focus of the German welfare state differs. When persons are young, state intervention reduces income differences between individuals mainly through the progressive tax system. Getting older and reaching retirement age income-smoothing redistribution via social security pensions becomes central. -- |
| Keywords: | long-term income inequality,income redistribution,social security |
| JEL: | D31 D63 H53 H55 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:fubsbe:201125&r=ias |
| By: | Christopher, Gandrud |
| Abstract: | Why do policies often seem to converge across countries at the same time? This question has been studied extensively in the diffusion literature. However, past research has not examined complex choice environments, especially where there are many alternatives. My paper aims to fill this gap in the literature. I show how Fine and Gray Competing Risks Event History Analysis can be used to tease apart the causes of policy convergence. I apply the method to an examination of the reasons why, from the mid-1990s to 2007, many countries created independent deposit insurers. I find an interaction between international recommendations and regional peers’ choices, particularly in the European Union. However, convergence appears to slow under the particular conditions of a banking crisis, regardless of how well independence was promoted. Possibly due to electoral incentives democracies seem to have been more likely to create independent insurers. Ultimately, I demonstrate how competing risks analysis can help enable future research on policy choices, complementing methods previously applied in political economy. |
| Keywords: | international policy diffusion; competing risks analysis; delegation; banking crisis; IMF; deposit insurance |
| JEL: | C41 F59 D80 |
| Date: | 2011–07–15 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:36087&r=ias |