Determinants for political risk insurance of direct investments in emerging markets

Esta dissertação analisa os principais determinantes para investidores contratarem seguro de proteção de riscos políticos (PRI) para seus investimentos diretos, assim com o racional de sair de um PRI não renovando suas políticas. Esta dissertação contribui para a literatura existente sobre PRI, investigando os principais motivadores para PRI, tais como, riscos políticos, riscos econômicos, capacidade do patrocinador, instrumento utilizado para realizar o investimento (horizonte do investimento) determina combinações de PRI utilizando um modelo binário de resposta não linear. Um banco de dados único da Multilateral Investment Guarantee Agency (MIGA) no período de 1990 até 2010, contendo informações sobre 693 investimentos incluindo sua cobertura para: seguro de risco de conversibilidade, seguro para risco de expropriação, riscos de guerras e distúrbios civis e riscos de quebra de contrato. Entretanto, percebemos que 47% destes seguros não permanecem ativos até o prazo originalmente contratado. Adicionalmente, instituições financeiras como garantidoras utilizam proporcionalmente mais dívida do que capital como instrumento de investimento e são largamente seguradas dentro da União Européia (EU). Por outro lado, investidores nos BRICs tendem a cobrir primariamente seus investimentos em infraestrutura. Resultados empíricos incluem que um aumento nos riscos de quebra de contrato e guerra civil estão totalmente correlacionados com a renovação de contratos de seguro, assim como um aumento da percepção de risco do pais que está recebendo o investimento.

The effects of adult literacy on earnings and employment

This paper provides evidence of the effects of adult literacy on individuals’ income and employability in Brazil based on information obtained from the monthly employment survey (PME). The OLS results indicate that after controlling for observable characteristics, there is a 21.25% increase in wages for individuals who become literate; however, there is no significant impact on employability. Moreover, the findings show an 8.1% increase in the probability of being employed in the formal sector. We also explore the longitudinal structure of the dataset to control for unobservable fixed characteristics of individuals. The fixed-effects estimators show smaller effects compared to the OLS estimators. We find that literacy has a 4.4% effect on wages and a 4.3% impact on the probability of being formally employed. The effects are significantly different from zero.

Essays in heterogeneous agent macroeconomics

This thesis is comprised of three chapters. The first article studies the determinants of the labor force participation of elderly American males and investigates the factors that may account for the changes in retirement between 1950 and 2000. We develop a life-cycle general equilibrium model with endogenous retirement that embeds Social Security legislation and Medicare. Individuals are ex ante heterogeneous with respect to their preferences for leisure and face uncertainty about labor productivity, health status and out-of-pocket medical expenses. The model is calibrated to the U.S. economy in 2000 and is able to reproduce very closely the retirement behavior of the American population. It reproduces the peaks in the distribution of Social Security applications at ages 62 and 65 and the observed facts that low earners and unhealthy individuals retire earlier. It also matches very closely the increase in retirement from 1950 to 2000. Changes in Social Security policy - which became much more generous - and the introduction of Medicare account for most of the expansion of retirement. In contrast, the isolated impact of the increase in longevity was a delaying of retirement. In the second article, I develop an overlapping generations model of criminal behavior, which extends prior research on crime by taking into account individuals' labor supply decisions and the stigma effect that affects convicted offenders, lowering their likelihood of employment. I use the model to guide a quantitative assessment of the determinants of crime and of a counterfactual experiment in which an income redistribution policy is thought as an alternative to greater law enforcement. The model economy considered in this paper is populated by heterogeneous agents who live for a realistic number of periods, have preferences over consumption and leisure, and differ in terms of their age, their skills as well as their employment shocks. In addition, savings may be precautionary and allow partial insurance against the labor income shocks. Because of the lack of full insurance, this model generates an endogenous distribution of wealth across consumers, enabling us to assess the welfare implications of the redistribution policy experiment. I calibrated the model using the US data for 1980 and then use the model to investigate the changes in criminality between 1980 and 1996. The main results that come out of this study are: 1) Law enforcement policy was the most important factor behind the fall in criminality in the period, while the increase in inequality was the most important single factor promoting crime; 2) Stigmatization is not a free-cost crime control policy; 3) Income redistribution can be a powerful alternative policy to fight crime. Finally, the third article studies the impact of HIV/AIDS on per capita income and education. It explores two channels from HIV/AIDS to income that have not been sufficiently stressed by the literature: the reduction of the incentives to study due to shorter expected longevity and the reduction of productivity of experienced workers. In the model individuals live for three periods, may get infected in the second period and with some probability die of Aids before reaching the third period of their life. Parents care for the welfare of the future generations so that they will maximize lifetime utility of their dynasty. The simulations predict that the most affected countries in Sub-Saharan Africa will be in the future, on average, thirty percent poorer than they would be without AIDS. Schooling will decline in some cases by forty percent. These figures are dramatically reduced with widespread medical treatment, as it increases the survival probability and productivity of infected individuals.

The effects of small firm tax incentives on employment levels

This paper aims to evaluate the impact on employment growth of a tax incentive program targeting Brazilian manufacturing small businesses (SIMPLES). This evaluation is conducted for two distinct periods: for the year 1997, when the program was first implemented, and for the year 1999, when the eligibility rule was modified to allow the eligibility of a broader group of firms. The evaluation takes into account two distinct channels through which the charted effects operate. The first is the employment variation in the firms that became eligible for the incentives, and the second is the change in the survival probability experienced by the same group of firms. Moreover, each of these channels can be activated either by the tax reduction dimension of the program or by its dimension of red tape simplification. Our results identify positive effects on employment growth for the tax incentive program only in the dimension of red tape simplification and its effects on the 1997 sample.

Commodity Taxation and Social Insurance

We investigate optimal commodity taxation in a social insurance framework based on Varian (1980). We show that the tax prescriptions in this moral hazard framework are notably similar to those derive

The effects of openness on industrial employment in Brazil

Este artigo tem dois objetivos principais. Primeiramente, apresentamos as pnnClpms evidências de que a baixa qualidade do emprego é o maior problema do mercado de trabalho brasileiro. Mostra-se que o país tem absorvido um crescimento da oferta de trabalho significativo ao longo dos últimos anos sem registrar um aumento da taxa de desemprego. No entanto, os postos de trabalho no Brasil são, em média, extremamente precários. Em grande medida, a precariedade do emprego no Brasil está relacionada à alta rotatividade da mão-de-obra, que desincentiva o investimento em treinamento, impedindo o crescimento da produtivid::;de do trabalho. De acordo com os indicadores passíveis de comparação internacional, o Brasil apresenta uma das maiores taxas de rotatividade do mundo. Em segundo lugar, estuda-se a evolução recente do emprego industrial, uma vez que o setor industrial está tradicionalmente associado à geração de bons empregos no Brasil. Mostra-se que o nível de emprego industrial tem se reduzido de forma praticamente contínua desde o início desta década. A estimação de um modelo de ajustamento parcial do emprego nos permite explicar este fenômeno. Mudanças estruturais significativas na elasticidade custo salarial do emprego e no coeficiente de tendência são detectadas a partir do início da década de 90. Um simples modelo teórico é usado de forma a interpretar estas mudanças estruturais como a resposta ótima das empresas industriais ao ambiente de maior competição externa, devido à abertura comercial. Isto, junto com o uso crescente de tecnologias poupadoras de mão-de-obra, são suficientes para explicar a brutal queda do emprego industrial no Brasil ao longo dos últimos seis anos.

On the cost of sympathy : a alternative model of insurance markets

The paper provides an alternative model for insurance market with three types of agents: households, providers of a service and insurance companies. Households have uncertainty about future leveIs of income. Providers, if hired by a household, perform a diagnoses and privately learn a signal. For each signal there is a procedure that maximizes the likelihood of the household obtaining the good state of nature. The paper assumes that providers care about their income and also about the likelihood households will obtain the good state of nature (sympathy assumption). This assumption is satisfied if, for example, they care about their reputation or if there are possible litigation costs in case they do not use the appropriate procedure. Finally, insurance companies offer contracts to both providers and households. The paper provides sufficient conditions for the existence of equilibrium and shows that the sympathy assumption 1eads to a 10ss of welfare for the households due to the need to incentive providers to choose the least expensive treatment.

The effects of the minimum wage on earnings and employment in Brazil

This paper analyzes the effects of the mlmmum wage on both, eammgs and employment, using a Brazilian rotating panel data (Pesquisa Mensal do Emprego - PME) which has a similar design to the US Current Population Survey (CPS). First an intuitive description of the data is done by graphical analysis. In particular, Kemel densities are used to show that an increase in the minimum wage compresses the eamings distribution. This graphical analysis is then forrnalized by descriptive models. This is followed by a discussion on identification and endogeneity that leads to the respecification of the model. Second, models for employment are estimated, using an interesting decomposition that makes it possible to separate out the effects of an increase in the minimum wage on number of hours and on posts of jobs. The main result is that an increase in the minimum wage was found to compress the eamings distribution, with a moderately small effect on the leveI of employment, contributing to alleviate inequality.

Do insurance defrauders want to be punished?

We analyze a Principal-Agent model of an insurer who faces an adverse selection problem. He is unable to observe if his client has a high risk or a low risk of having an accident. At the underwriting of the contract, the insurer requests the client to declare his risk. After that, the former can costly audit the truthfulness of this announcement. If the audit confirms a false declaration, the insurer is legally allowed to punish the defrauder. We characterize the efRcient contracts when this punishment is bounded from above by a legal restriction. Then, we do some comparative statics on the efRcient contracts and on the agent's utility. The most important result of this paper concerns the legal limit to a defrauder's punishment. We prove that there exists a uni que value of this legal limit that maximizes the expected utility of a high risk type. Facing this particular value of the legal limit to a defrauder's punishment, the insurer will effectively audit a low risk reporto We also show that this particular value increases with the probability of facing a high risk policyholder. Therefore, when this probability is sufRciently high, the nullity of the contract is not enough. From the point of view of a potential defrauder, the law should allow harder sanctions. This is an striking result because the nullity of the contract is a common sanction for this kind of fraud in the USA and in some European countries.

Project portfolio management: an analysis from the insurance industry IT area

This paper aims to bring more information related to the critical question "how IT areas of insurance companies are defining and delivering their strategic initiatives Portfolios?" and make conclusions based on the collected data. To reach these interpretations, it is composed of a theoretical investigation on the theme, a strategy delineation for the research methodology and a conclusion presentation based on the findings. In this last part, this study concluded that explored organization does not applied a sufficient number of best practices answering the critical question as "the company is not mature on this subject".

Optimal unemployment insurance for couples

This work analyzes the optimal design of an unemployment insurance program for couples, whose joint search problem in the labor market differ significantly from the problem faced by single agents. We use a version of the sequential search model of the labor market adapted to married agents to compare optimal constant policies for single and married agents, as well as characterize the optimal constant policy when the agency faces single and married agents simultaneously. Our main result is that an agency that gives equal weights to single and married agents will want to give equal utility promises to both types of agents and spend more on the single agent.

Financial guarantees in Brazilian life insurance and pension plans

Recently regulated Brazilian life and pension products offer a benefit structure composed of minimum guaranteed annual rate, in°ation adjustment according to a price index and participation on an investment fund performance. We present a valuation model for these products. We establish a fair condition relationship between minimum guarantees and participation rates, and explore its behavior over a space of maturities, interest rates, and also fund and price index volatilities and correlation. Besides consistency to reference models, we found that the effect of the fund volatility is conditioned to the price index volatility level and the correlation between them.

How to manage macroeconomic policies to foster growth and employment and prevent financial and external crises

My presentation focuses on the implementation of a macroeconomic policy regime which, I believe, is capable of simultaneously attaining several targets, including the promotion of growth and employment and the prevention of external and financial crises.

Problems related to the employment of thin uranium films as neutron dosimeters

Thin uranium films built on muscovite mica basis and obsidian samples having known ages were irradiated with thermal neutrons at the IPEN/CNEN reactor, São Paulo. Comparing thin film performance with the obsidian one, it was observed that the latter feel a greater neutron fluence. Nominal fluences at the used facility are in agreement with the results obtained analysing the obsidian samples. A probable hypothesis to explain this disagreement, namely, the uranium loss from the thin films, was ruled out. © 1995.