Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/86926
Authors: 
Ejrnaes, Mette
Hochguertel, Stefan
Year of Publication: 
2008
Series/Report no.: 
Tinbergen Institute Discussion Paper 08-065/3
Abstract: 
We study entrepreneurs’ behavioral responses of effort (moral hazard) to avoid business failure.This is done in the context of an unemployment insurance scheme for self-employed, wherewe estimate how much of the transition probability to unemployment can be causally attributedto being insured. To disentangle moral hazard from adverse selection we use an institutional featureof the Danish unemployment system that provides an additional motive to choose insurance(an early retirement option). We estimate a bivariate random effects probit on a self-employmentsample drawn from register data. We find that those who are insured are 2 percentage pointsmore likely to subsequently become unemployed compared to the uninsured, however only 0.6percentage points can be attributed to behavioral responses.
Subjects: 
moral hazard
entrepreneurs
self-employment
unemployment insurance
panel data
JEL: 
C33
C35
J2
D82
L26
J65
Document Type: 
Working Paper

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