Economics Sample Paper on Quantifying the Benefits of Social Insurance: Unemployment Insurance and Health


Title of Research Paper: Quantifying the Benefits of Social Insurance: Unemployment Insurance and Health

Authors: Elira Kuka

Year: 2015

What is the research question or goal of the study?

There are three research questions in this paper. The first research question is to determine the benefits of Unemployment Insurance (UI) Program. The second research question is to determine empirically whether the Unemployment Insurance (UI) generosity has potential of mitigating negative effects of job loss. The last research question is to estimate the overall effects of Unemployment Insurance (UI) on employment exist and job search.

What does theory predict?

Because it has been established that the current public health provisions and safety net programs have health effects, theories suggest that the health effect will be larger if they are withdrawn. Theories also predict that stress and economic uncertainty will reduce for people living in UI states that are more generous. Lastly, theories suggest that better UI benefits will improve mental health alongside smoking and alcohol consumption.

What do previous studies on the topic find? Are there issues with these studies? Describe.

Previous studies have shown that job displacement significantly leads to negative effects on mortality, health, infant health, educational achievement, as well as earnings. Therefore, these issues can be effectively mitigated using UI. In addition, previous studies have shown that job loss negatively affects the health of individuals. For instance, a previous study by Sullivan and Wachter (2009) indicated that the mortality of US male workers who are displaced increases by more than 50%. The main issue of these previous studies is the effect of job loss on the population.

What is the empirical strategy of this paper? How does it address the issues above?

This research study employed an empirical strategy that exploited the variation existing in the unemployment insurance (UI) benefits caused majorly by the exogenous changes in the state laws governing the program. The researcher created a simulated UI benefits, which is a direct measure of generosity on the health. This empirical strategy addresses the above issues by measuring the level of generosity against the UI benefits.

What do the authors find?

The researcher found that health utilization and health insurance coverage increased due to higher unemployment insurance (UI) generosity. In addition, higher UI generosity has the effect of significantly improving the self-reported health. In addition, the researcher found that the effects of UI are stronger during periods of higher unemployment rates.

Can you think of any issues (problems) with this study?

Although this research study is generally good, its main weakness is that there are chances of bias estimates especially in measuring the effects of unemployment insurance generosity. This is because the individual UI benefits form part of the earnings function. The use of simulated UI benefits may not significantly reduce the bias as anticipated.