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ESRC Research Fellowship (2009-2012)

Self-insurance and social insurance over the life-cycle

Policies on taxes and benefits that affect individuals directly at a particular age will have implications for their behaviour across their whole life-time. The incentive to save or work when young may be affected by insurance against poor health or against unemployment in later life; and insurance against adverse outcomes early in life may reduce effort, and affect the accumulation of skills or saving which would be of benefit later in life.
The aims of this project are to use a life-cycle framework to quantify the different risks that individuals face; to assess the insurance benefit and the incentive costs of the various government social insurance programmes that aim to mitigate these risks; and to model how social insurance interacts with an individual's own decisions. The risks considered are to employment, productivity, health and demographics, while the main social insurance mechanisms are incapacity benefit, unemployment insurance and income support.
The analysis uses computer simulation which enables a rich specification of the economic environment and of the choices available to individuals. This integrated analysis of the various risks individuals face and the multiple social insurance programmes available helps to provide a plausible assessment of the value of social insurance and self-insurance.


Computer code (FORTRAN) for solving life-cycle models

FORTRAN Code to solve: Attanasio, Low and Sanchez-Marcos (2008) "Explaining changes in female labor supply over the life-cycle" American Economic Review available here.

FORTRAN code for: Low, Meghir and Pistaferri (2009) "Wage risk and employment risk over the life-cycle" American Economic Review available here.

Related Papers

Low, H., Meghir, C. and Pistaferri, L (2010) "Wage risk and employment risk over the life cycle" American Economic Review 100(4): 1432--1467.

Crossley, T. and Low, H. (2014) "Job loss, credit constraints and consumption growth" Review of Economics and Statistics (forthcoming)

Ball, S. and Low, H. (2014) "Do Self-Insurance and Disability Insurance Prevent Consumption Loss on Disability?" Economica, 81: 468-490

Crossley, T., Low, H. and O'Dea, C.( 2013), "Household consumption through recent recessions" Fiscal Studies 34(2): 203-229

Low, H. and Pistaferri, L. (2013) "Disability Insurance and the Dynamics of the Incentive-Insurance Trade-off" NBER Working Paper 15962

Alan, S., Crossley, T. and Low, H. (2012) "Saving on a rainy day, borrowing for a rainy day" Institute for Fiscal Studies Working Paper 12/11; Cambridge Working Papers in Economics 12/22

Fisher, H. and Low, H. (2012) "Does marriage matter? Financial implications of relationship breakdown" Institute for Fiscal Studies Working Paper

End of Grant Information

End of Grant Report

Impact Statement