Explore the vast range of titles available.

We develop a new quantile-based panel data framework to study the nature of income persistence and the transmission of income shocks to consumption. Log-earnings are the sum of a general Markovian persistent component and a transitory innovation. The persistence of past shocks to earnings is allowed to vary according to the size and sign of the current shock. Consumption is modeled as an age-dependent non-linear function of assets, unobservable tastes, and the two earnings components. We establish the nonparametric identification of the nonlinear earnings process and of the consumption policy rule. Exploiting the enhanced consumption and asset data in recent waves of the Panel Study of Income Dynamics, we find that the earnings process features nonlinear persistence and conditional skewness. We confirm these results using population register data from Norway. We then show that the impact of earnings shocks varies substantially across earnings histories, and that this nonlinearity drives heterogeneous consumption responses. The framework provides new empirical measures of partial insurance in which the transmission of income shocks to consumption varies systematically with assets, the level of the shock, and the history of past shocks.

This paper uses the information contained in the joint dynamics of individuals' labor earnings and consumption-choice decisions to quantify both the amount of income risk that individuals face and the extent to which they have access to informal insurance against this risk. We accomplish this task by using indirect inference to estimate a structural consumption-savings model, in which individuals both learn about the nature of their income process and partly insure shocks via informal mechanisms. In this framework, we estimate (i) the degree of partial insurance, (ii) the extent of systematic differences in income growth rates, (iii) the precision with which individuals know their own income growth rates when they begin their working lives, (iv) the persistence of typical labor income shocks, (v) the tightness of borrowing constraints, and (vi) the amount of measurement error in the data. In implementing indirect inference, we find that an auxiliary model that approximates the true structural equations of the model (which are not estimable) works very well, with negligible small sample bias. The main substantive findings are that income shocks are moderately persistent, systematic differences in income growth rates are large, individuals have substantial amounts of information about their income growth rates, and about one-half of income shocks are smoothed via partial insurance. Putting these findings together, the amount of uninsurable lifetime income risk that individuals perceive is substantially smaller than what is typically assumed in calibrated macroeconomic models with incomplete markets.

The design of public subsidies for long-term care (LTC) programmes to support frail, elderly individuals in Europe is subject to both tight budget constraints and increasing demand preassures for care. However, what helps overcoming the constraints that modify LTC entitlements? We provide a unifying explanation of the conditions that facilitate the modification of public financial entitlements to LTC. We build on the concept of ‘implicit partnerships’, an implicit (or ‘silent’) agreement, encompassing the financial co-participation of both public funders, and families either by both allocating time and/or financial resources to caregiving. Next, we provide suggestive evidence of policy reforms modifying public entitlements in seven European countries which can be classified as either ‘implicit user partnerships’ or ‘implicit caregiver partnerships’. Finally, we show that taxpayers attitudes mirror the specific type of implicit partnership each country has adopted. Hence, we conclude that the modification of long-term care entitlements require the formation of some type of ‘implicit partnership'.

Employer-provided insurance is the leading source of medical insurance for non-elderly Americans. However, it leaves many without coverage. Evidence suggests that the non-group insurance market does a poor job of filling in these gaps, for those with both short- and long-term uninsurance. It does so for all income and age groups, as well as for both genders. It does fill some of the gaps in employer-provided coverage for those with middle and high incomes, though very incompletely.

Purpose - The purpose of this paper is to study the optimal coverage limit in a model of deposit insurance with capital requirements and risk sensitive premia to prevent moral hazard. Design/methodology/approach - The theoretical model has incorporated capital requirements, risk-sensitive premium, and partial deposit insurance in a partial equilibrium model. The model discusses the interaction among risk-taking banks, ex-ante heterogeneous depositors, and a deposit insurer. Findings - First, the paper shows that optimal coverage encourages depositors' monitoring and withdrawals. Partial deposit insurance improves social welfare. Second, risk-sensitive premia and market discipline are essential to reduce bank risk taking behavior. Third, adjustment between level of coverage and the premium guarantees long term liquidity of the deposit insurance funds and makes banks better off. Fourth, numerical findings are consistent with the empirical evidence that shows differences in coverage between countries. Research limitations/implications - Timing and frequency of adjustments to coverage limits and the implementation of co-insurance have been beyond the scope of this study but those implications are worth further investigation. Originality/value - In the current crisis, banking regulations combined with poor management and supervision have been responsible for banks' improper leverages, lending and securitization. A bank failure could easily turn into a crisis when the financial institution is overly exposed to credit risks and when the government is least equipped to deal with those risks. Thus, the study of the partial deposit insurance is important in achieving stability in the banking sector.

Pratt [1964] establishes that a more risk-averse individual in the Arrow-Pratt sense has a higher compensating risk premium for full insurance, but no comparable result has been established for partial insurance. Ross [1981] shows that a more risk-averse individual in the Arrow-Pratt sense may not be willing to pay more for a reduction in risk in the sense of mean-preserving contraction. We show that a more risk-averse individual in the Arrow-Pratt sense has a higher compensating risk premium for all empirically relevant forms of partial insurance because they induce a reduction in risk in the stronger sense of Bickel and Lemann [1979].

We propose a robust method of discrete choice analysis when agents’ choice sets are unobserved. Our core model assumes nothing about agents’ choice sets apart from their minimum size. Importantly, it leaves unrestricted the dependence, conditional on observables, between choice sets and preferences. We first characterize the sharp identification region of the model’s parameters by a finite set of conditional moment inequalities. We then apply our theoretical findings to learn about households’ risk preferences and choice sets from data on their deductible choices in auto collision insurance. We find that the data can be explained by expected utility theory with low levels of risk aversion and heterogeneous non-singleton choice sets, and that more than three in four households require limited choice sets to explain their deductible choices. We also provide simulation evidence on the computational tractability of our method in applications with larger feasible sets or higher-dimensional unobserved heterogeneity.

We develop a new nonparametric approach for discrete choice and use it to analyze the demand for health insurance in the California Affordable Care Act marketplace. The model allows for endogenous prices and instrumental variables, while avoiding parametric functional form assumptions about the unobserved components of utility. We use the approach to estimate bounds on the effects of changing premiums or subsidies on coverage choices, consumer surplus, and government spending on subsidies. We find that a $10 decrease in monthly premium subsidies would cause a decline of between 1.8% and 6.7% in the proportion of subsidized adults with coverage. The reduction in total annual consumer surplus would be between $62 and $74 million, while the savings in yearly subsidy outlays would be between $207 and $602 million. We estimate the demand impacts of linking subsidies to age, finding that shifting subsidies from older to younger buyers would increase average consumer surplus, with potentially large impacts on enrollment. We also estimate the consumer surplus impact of removing the highly-subsidized plans in the Silver metal tier, where we find that a non-parametric model is consistent with a wide range of possibilities. We find that comparable mixed logit models tend to yield price sensitivity estimates toward the lower end of the nonparametric bounds, while producing consumer surplus impacts that can be both higher and lower than the nonparametric bounds depending on the specification of random coefficients.

Foreign direct investment and private capital flows are highly concentrated geographically, with almost half of them reaching five top destinations. These flows tend to evade many high-risk countries. Regulatory and contractual risks, particularly in infrastructure, have inhibited investments in many parts of the developing world. A core objective of the World Bank Group (WBG) has been to support the flow of private investment for development; guarantees and insurance have been among the instruments that the WBG has used to pursue this objective. This study examines three main questions: • Should the WBG be in the guarantee business? • Have guarantee instruments in the three WBG institutions been used to their potential as reflected in WBG expectations and perceived demand? • Is the WBG appropriately organized to deliver its range of guarantee products in an effective and efficient manner?

Heart Failure (HF) is a considerable public health issue that affects more than 64 million people worldwide, with a prevalence of 1% to 3% in Western industrialized countries. However, reliable data on the incidence of HF are lacking, making it difficult to assess. The aim of our study was to estimate the age- and sex-specific incidence of HF in Germany using the illness-death model (IDM) and an associated partial differential equation (PDE), based on aggregated prevalence and mortality data. Prevalence data for 2009-2017 were used from the Central Institute for Statutory Health Insurance (Zi). Data on HF mortality were taken from a comparable Norwegian population from 2013. A PDE using a bootstrapping approach was used to calculate HF incidence. The estimated incidence was the median of 5,000 samples, complemented by 95% bootstrapping confidence intervals (CIs). We ran a ± 15% calibration sensitivity analysis by uniformly scaling Norwegian Mortality rate ratios (MRRs) to test transferability to the German population. The incidence was then re-estimated with the full 5,000-replicate bootstrap. Medians with 95% empirical intervals were reported for each scenario. In all age groups, men had a higher incidence than women. The highest incidences were estimated in age groups over 90 years old, with approximately 88/1,000 person-years (py) (95% CI: 73-102) for men and 45/1,000 py (95% CI: 29-61) for women. A sharp increase in incidence rates could be seen in men from the age of 60 years and in women from the age of 65 years. The slope of the incidence was less pronounced among women aged above 60 years compared to men, without impacting the overall trend of increased incidence in higher age groups for women. Uniform ±15% scaling shifted incidence levels, but preserved the age-specific shape and male-female ordering. The effects were small to moderate in age groups from 50 to 90, and negligible in age groups ≤45, with the largest absolute shifts observed at very old ages. The IDM and an associated PDE were used to estimate a rising incidence of HF with age for both men and women. These findings underscore the importance of age- and sex-specific approaches in HF prevention and management strategies, particularly in older populations where the burden of HF is most pronounced. The method complements existing estimation techniques while circumventing the necessity of costly follow-up studies.