Entrepreneurial Moral Hazard in Income Insurance: Empirical Evidence from a Large Administrative Sample
Mette Ejrnæs and
Stefan Hochguertel ()
No 2008-02, CAM Working Papers from University of Copenhagen. Department of Economics. Centre for Applied Microeconometrics
We study risk behavior of Danish self-employed entrepreneurs, whose income risk may be driven by both exogenous factors and effort choice (moral hazard). Partial insurance is available through voluntary unemployment insurance (UI). Additional incentives to sign insurance contracts stem from a UI-embedded, government-subsidized early retirement (ER) program, giving benefits that are unrelated to business risk. Indeed, we argue that the self-employeds’ incentives to insure themselves stem from the ER plan rather than from the UI cover. We show how to use a policy reform to identify moral hazard in observed transitions to unemployment when insurance is a choice variable. We use administrative (register) panel data covering 10% of the Danish population. We find that the insured are indeed more likely to transit into unemployment than the uninsured, once we properly instrument for the insurance choice.
Keywords: entrepreneurs; self-employment; early retirement; unemployment insurance; moral hazard; Denmark; panel data (search for similar items in EconPapers)
JEL-codes: C33 D12 D14 D91 J23 J26 (search for similar items in EconPapers)
Pages: 43 pages
New Economics Papers: this item is included in nep-cta and nep-ias
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3) Track citations by RSS feed
Downloads: (external link)
Our link check indicates that this URL is bad, the error code is: 404 Not Found (http://www.econ.ku.dk/cam/wp0910/wp0708/2008-02.pdf/ [301 Moved Permanently]--> https://www.econ.ku.dk/cam/wp0910/wp0708/2008-02.pdf/)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:kud:kuieca:2008_02
Access Statistics for this paper
More papers in CAM Working Papers from University of Copenhagen. Department of Economics. Centre for Applied Microeconometrics ï¿½ster Farimagsgade 5, Building 26, DK-1353 Copenhagen K., Denmark. Contact information at EDIRC.
Bibliographic data for series maintained by Thomas Hoffmann ().