Template-Type: ReDIF-Paper 1.0
Series: Tinbergen Institute Discussion Papers
Creation-Date: 2022-05-19
Number: 22-040/V
Author-Name: Mette Ejrnæs
Author-Workplace-Name: University of Copenhagen
Author-Name: Stefan Hochguertel
Author-Workplace-Name: Vrije Universiteit Amsterdam
Title: Identifying Risk-based Selection in Social Insurance: New Approaches and Findings
Abstract: We study risk-based selection into a voluntary unemployment insurance (UI) scheme. To disentangle behavioral effects from selection, we exploit variation in the sign-up induced by an early retirement scheme embedded into the UI system. We combine an event study with a difference-in-difference approach applied to Danish register data to quantify the selection. We find that individuals who sign up for UI are negatively selected in terms of subsequent unemployment. However, we find important heterogeneity across education and gender. In addition, life cycle events (such as buying a first home) point to effects consistent with dynamic selection on moral hazard. 
Classification-JEL: J64, D82, J65
Keywords: Unemployment, insurance, selection
File-URL: https://papers.tinbergen.nl/22040.pdf
File-Format: application/pdf
File-Size: 1,613,487 bytes
Handle: RePEc:tin:wpaper:20220040