Essays on Formal and Informal Long-Term Health Insurance Markets

This dissertation consists of two essays examining formal and informal long term health insurance markets. The first essay analyzes heterogeneity of Long-Term Care Insurance policyholders in their lapse decision, and how their ex-ante and ex-post subjective beliefs about the probability of needing Long-Term Care affect their lapse decisions. In this essay, I develop a model of lapse decision in a two-period insurance framework with a Bayesian learning process and implement several empirical specifications of the model using longitudinal data from the Health and Retirement Study. The results show that policyholders\u27 ex- ante point predictions of their probabilities and their uncertainties about them have a persistent but declining impact on lapse decisions. Those who believe that their risk is higher are indeed more likely to remain insured. However, as their uncertainties surrounding their ex-ante point predictions increase, their chances of lapsing increase regardless of their initial perception biases. These results are heterogeneous across cohorts and policyholders and, in particular, show that those in the older group near the average age of Nursing Home entry have a precise prediction of their risk levels compared to the younger cohort. Policy simulations show that a more informed initial purchase decision reduces the chance of lapsing down the road. The second essay examines the extent to which informal risk sharing arrangement provides insurance against health shocks. I develop a comprehensive model of informal risk sharing contract with two-sided limited commitment which extends the standard model to a regime with the following features. Information regarding the nature of realized health shocks is imperfect and individuals\u27 health capital stock serves as a storage technology and is a factor of production. The theoretical results show that, in such a regime, Pareto optimal allocations are history dependent even if participation constraints do not bind. I perform numerical analysis to show that risk sharing against health shock is less likely to be sustainable among non-altruistic individuals with different levels of biological survival rates and health capital productivity. The results also show that optimal allocations vary depending on the set of information available to individuals. Using panel data of households from villages in rural Ethiopia, I test the main predictions of the theoretical model. While there is negative history dependence in transfers among non-altruistic partners, history dependence is positive when risk sharing is along bloodline and kinship. However, neither short-term nor long-term health shocks are insured through informal risk sharing arrangements among non-altruistic individuals

Women Self-Selection out of the Credit Market in Africa

Women are disproportionately disadvantaged in access to finance in Africa. While supply-side detriments, such as high interest rates and collateral requirements, are well documented in the literature, little is understood about how demand-side factors contribute to the observed gender gap in access to finance. This paper provides the first empirical evidence on how women managers’ perception about their creditworthiness contributes to the large gender gap in Africa, particularly in the Northern region. One of the innovations of the paper is introducing a theoretical model using the credit market framework with imperfect and asymmetric information to explain what may drive loan applicants to self-select. We use firm-level data for 47 African countries from the World Bank Enterprise Survey. We find that women entrepreneurs in Africa, in general, and in North Africa, in particular, are more likely to self-select themselves out of the credit market due to low perceived creditworthiness compared to their men counterparts. The results also suggest that the observed self-selection behavior is not a response mechanism to current discriminatory lending practices by the banks. The results are robust to different empirical specifications. The findings will inform policies towards greater financial inclusion of women in the region

Women Self-Selection out of the Credit Market in Africa

Women are disproportionately disadvantaged in access to finance in Africa. While supply-side detriments, such as high interest rates and collateral requirements, are well documented in the literature, little is understood about how demand-side factors contribute to the observed gender gap in access to finance. This paper provides the first empirical evidence on how women managers’ perception about their creditworthiness contributes to the large gender gap in Africa, particularly in the Northern region. One of the innovations of the paper is introducing a theoretical model using the credit market framework with imperfect and asymmetric information to explain what may drive loan applicants to self-select. We use firm-level data for 47 African countries from the World Bank Enterprise Survey. We find that women entrepreneurs in Africa, in general, and in North Africa, in particular, are more likely to self-select themselves out of the credit market due to low perceived creditworthiness compared to their men counterparts. The results also suggest that the observed self-selection behavior is not a response mechanism to current discriminatory lending practices by the banks. The results are robust to different empirical specifications. The findings will inform policies towards greater financial inclusion of women in the region

Foresight Africa: Top Priorities for the Continent 2020-2030

The new year 2020 marks the beginning of a promising decade for Africa. Through at least the first half of the decade, economic growth across Africa will continue to outperform that of other regions, with the continent continuing to be home to seven of the world's 10 fastest-growing economies. Collective action among African and global policymakers to improve the livelihoods of all under the blueprint of the Sustainable Development Goals and the African Union's Agenda 2063 is representative of the shared energy and excitement around Africa's potential. With business environments improving, regional integration centered around the African Continental Free Trade Agreement progressing, and the transformational technologies of Fourth Industrial Revolution spreading, never before has the region been better primed for trade, investment, and mutually beneficial partnerships. The recent, unprecedented interest of an increasingly diversified group of external partners for engagement with Africa highlights this potential. Despite the continent's promise, though, obstacles to success linger, as job creation still has not caught up with the growing youth labor force, gaps in good and inclusive governance remain, and climate change as well as state fragility threaten to reverse the hard-fought-for gains of recent decades.This special edition of Foresight Africa highlights the triumphs of past years as well as strategies from our experts to tackle forthcoming, but surmountable, obstacles to a prosperous continent by 2030

Impact evaluation of the Ethiopian Health Services Extension Programme

Ethiopia has launched a pro-poor health services extension programme since 2003 to deliver preventive and basic curative health services to its inhabitants. Despite the massive support and recognition the programme has received, there has not been proper evaluation of its impact. This study has applied propensity score matching and regression adjustment techniques to evaluate the short-term and intermediate-term impacts of the programme on child and maternal health indicators in the programme villages. Empirical data for the study were collected from 3095 households from both programme and non-programme villages in rural Ethiopia. The estimated results indicate that the programme has significantly increased the proportion of children fully and individually vaccinated against tuberculosis, polio, diphtheria-pertussis-tetanus, and measles. The study finds heterogeneity in childhood immunisation coverage as a result of differences in terms of the number of health extension workers, in the quality of health posts and in terms of the educational achievement of mothers across programme villages. The proportions of children and women using insecticide-treated bednets for malaria protection are significantly larger in programme villages than in non-programme villages. The effect on preventive maternal care is rather limited. Whereas women in the programme villages appeared to make their first contact with a skilled health service provider significantly earlier during pregnancy, very little effect is detected on other prenatal and postnatal care services. Moreover, the programme has not reduced the incidence and duration of diarrhoea and cough diseases among under-five children.impact evaluation, health services extension, propensity scores, regression adjustment, Ethiopia,