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Title:Labor and Financial Market Interactions: The Case of Labor Income Risk and Car Insurance in the UK 1969-95 PDF Logo
Authors:Koeniger, Winfried
Issue Date:2001
Series/Report no.:IZA Discussion paper series 240
Abstract:Microeconomic theory predicts that under certain regularity conditions higher idiosyncratic risk increases the propensity to insure against independent marketable risks. We apply these predictions to the specific case of labor income risk and car insurance using data from the UK. The main empirical results are: ? higher labor income risk induces a higher demand for car insurance. ? the effects of increases in labor income risk after 1979 seem to be more than offset by a more liberal financial market. ? the effects seem to be important on the macro level in the 70s whereas they become negligible in the 80s and 90s.
Subjects:Labor income risk
insurance
imperfect markets
precautionary motive
United Kingdom
JEL:D12
D81
G22
J31
Document Type:Working Paper
Appears in Collections:IZA Discussion Papers, Forschungsinstitut zur Zukunft der Arbeit (IZA)

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