IDEAS home Printed from https://ideas.repec.org/a/sae/sagope/v10y2020i4p2158244020983024.html
   My bibliography  Save this article

The Impact of Demographic Burden on Insurance Density

Author

Listed:
  • Elena Nebolsina

Abstract

The article investigates the relationship between demographic burden and insurance market by employing panel vector autoregression models with six groups of endogenous variables to a dynamic panel data set of 25 economies for the period 1980–2016. Demographic burden is represented by dependency ratios measured in respect to the population younger than the age of 15 (young-age dependency ratio), population above the age of 64 (old-age dependency ratio) as well as males and females above the age of 64 being examined separately. As indicators of insurance market development, life insurance density, non-life insurance density, and total insurance density are used. The robustness of the results is verified across 10 subsamples of the main observation period. The conducted analyses show a heterogeneous impact of demographic burden on the insurance market. The impulse responses reveal that negative effects prevail in the long term, which may result from the negative impact of an increasing demographic burden on the economy. In the short term, growth in female and male old-age dependency ratios drives up life and non-life insurance density.

Suggested Citation

  • Elena Nebolsina, 2020. "The Impact of Demographic Burden on Insurance Density," SAGE Open, , vol. 10(4), pages 21582440209, December.
    • Handle: RePEc:sae:sagope:v:10:y:2020:i:4:p:2158244020983024
    DOI: 10.1177/2158244020983024
    as

    Download full text from publisher

    File URL: https://journals.sagepub.com/doi/10.1177/2158244020983024
    Download Restriction: no
    File URL: https://libkey.io/10.1177/2158244020983024?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. David E. Bloom & David Canning, 2004. "Global demographic change : dimensions and economic significance," Proceedings - Economic Policy Symposium - Jackson Hole, Federal Reserve Bank of Kansas City, issue Aug, pages 9-56.
    2. Savina Gygli & Florian Haelg & Niklas Potrafke & Jan-Egbert Sturm, 2019. "The KOF Globalisation Index – revisited," The Review of International Organizations, Springer, vol. 14(3), pages 543-574, September.
    3. Marco Arena, 2008. "Does Insurance Market Activity Promote Economic Growth? A Cross‐Country Study for Industrialized and Developing Countries," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 75(4), pages 921-946, December.
    4. Mincer, Jacob & Polachek, Solomon, 1974. "Family Investment in Human Capital: Earnings of Women," Journal of Political Economy, University of Chicago Press, vol. 82(2), pages 76-108, Part II, .
    5. Francine D. Blau & Lawrence M. Kahn, 2013. "Female Labor Supply: Why Is the United States Falling Behind?," American Economic Review, American Economic Association, vol. 103(3), pages 251-256, May.
    6. Hadas Mandel & Moshe Semyonov, 2014. "Gender Pay Gap and Employment Sector: Sources of Earnings Disparities in the United States, 1970–2010," Demography, Springer;Population Association of America (PAA), vol. 51(5), pages 1597-1618, October.
    7. Francine D. Blau & Lawrence M. Kahn, 2017. "The Gender Wage Gap: Extent, Trends, and Explanations," Journal of Economic Literature, American Economic Association, vol. 55(3), pages 789-865, September.
    8. Becker, Gary S, 1985. "Human Capital, Effort, and the Sexual Division of Labor," Journal of Labor Economics, University of Chicago Press, vol. 3(1), pages 33-58, January.
    9. Stephanie Hussels & Damian Ward & Ralf Zurbruegg, 2005. "Stimulating the Demand for Insurance," Risk Management and Insurance Review, American Risk and Insurance Association, vol. 8(2), pages 257-278, September.
    10. Blau, Francine D & Kahn, Lawrence M, 1997. "Swimming Upstream: Trends in the Gender Wage Differential in 1980s," Journal of Labor Economics, University of Chicago Press, vol. 15(1), pages 1-42, January.
    11. Im, Kyung So & Pesaran, M. Hashem & Shin, Yongcheol, 2003. "Testing for unit roots in heterogeneous panels," Journal of Econometrics, Elsevier, vol. 115(1), pages 53-74, July.
    12. Beenstock, Michael & Dickinson, Gerry & Khajuria, Sajay, 1986. "The determination of life premiums: An international cross-section analysis 1970-1981," Insurance: Mathematics and Economics, Elsevier, vol. 5(4), pages 261-270, October.
    13. Chun Ping Chang & Aziz N Berdiev, 2013. "Natural Disasters, Political Risk and Insurance Market Development," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 38(3), pages 406-448, July.
    14. Peter Pedroni, 1999. "Critical Values for Cointegration Tests in Heterogeneous Panels with Multiple Regressors," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 61(S1), pages 653-670, November.
    15. David S. Reher, 2011. "Economic and Social Implications of the Demographic Transition," Population and Development Review, The Population Council, Inc., vol. 37(Supplemen), pages 11-33, January.
    16. Alma Cohen & Liran Einav, 2007. "Estimating Risk Preferences from Deductible Choice," American Economic Review, American Economic Association, vol. 97(3), pages 745-788, June.
    17. Yunus Aksoy & Henrique S. Basso & Ron P. Smith & Tobias Grasl, 2019. "Demographic Structure and Macroeconomic Trends," American Economic Journal: Macroeconomics, American Economic Association, vol. 11(1), pages 193-222, January.
    18. Ito, Takatoshi & Rose, Andrew K. (ed.), 2010. "The Economic Consequences of Demographic Change in East Asia," National Bureau of Economic Research Books, University of Chicago Press, number 9780226386850, December.
    19. T. Fent & B. Mahlberg & A. Prskawetz, 2008. "Demographic Change and Economic Growth," Springer Books, in: Florian Kohlbacher & Cornelius Herstatt (ed.), The Silver Market Phenomenon, chapter 1, pages 3-16, Springer.
    20. David E. Bloom & David Canning & Jocelyn E. Finlay, 2010. "Population Aging and Economic Growth in Asia," NBER Chapters, in: The Economic Consequences of Demographic Change in East Asia, pages 61-89, National Bureau of Economic Research, Inc.
    21. Rudra P. Pradhan & Saurav Dash & Rana Pratap Maradana & Manju Jayakumar & Kunal Gaurav, 2017. "Insurance market density and economic growth in Eurozone countries: the granger causality approach," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 3(1), pages 1-24, December.
    22. Feyen, Erik & Lester, Rodney & Rocha, Roberto, 2013. "What Drives the Development of the Insurance Sector? An Empirical Analysis Based on a Panel of Developed and Developing Countries," Journal of Financial Perspectives, EY Global FS Institute, vol. 1(1), pages 117-139.
    23. Nicole Maestas & Kathleen J. Mullen & David Powell, 2023. "The Effect of Population Aging on Economic Growth, the Labor Force, and Productivity," American Economic Journal: Macroeconomics, American Economic Association, vol. 15(2), pages 306-332, April.
    24. Peter Haiss & Kjell Sümegi, 2008. "The relationship between insurance and economic growth in Europe: a theoretical and empirical analysis," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 35(4), pages 405-431, September.
    25. W.N.W Azman‐Saini & Peter Smith, 2011. "Finance And Growth: New Evidence On The Role Of Insurance," South African Journal of Economics, Economic Society of South Africa, vol. 79(2), pages 111-127, June.
    26. Takatoshi Ito & Andrew Rose, 2010. "The Economic Consequences of Demographic Change in East Asia," NBER Books, National Bureau of Economic Research, Inc, number ito_08-2, March.
    27. Beck, Thorsten & Webb, Ian, 2002. "Determinants of life insurance consumption across countries," Policy Research Working Paper Series 2792, The World Bank.
    28. Chun-Ping Chang & Chien-Chiang Lee, 2010. "Globalization and Economic Growth: A Political Economy Analysis for OECD Countries," Global Economic Review, Taylor & Francis Journals, vol. 39(2), pages 151-173.
    29. Granger, C W J, 1969. "Investigating Causal Relations by Econometric Models and Cross-Spectral Methods," Econometrica, Econometric Society, vol. 37(3), pages 424-438, July.
    30. Axel Dreher, 2006. "Does globalization affect growth? Evidence from a new index of globalization," Applied Economics, Taylor & Francis Journals, vol. 38(10), pages 1091-1110.
    31. Chien-Chiang Lee & Chi-Hung Chang, 2012. "Globalisation and Convergence of International Life Insurance Markets," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 37(1), pages 125-154, January.
    32. Campbell, Ritchie A, 1980. "The Demand for Life Insurance: An Application of the Economics of Uncertainty," Journal of Finance, American Finance Association, vol. 35(5), pages 1155-1172, December.
    33. Pedroni, Peter, 1999. "Critical Values for Cointegration Tests in Heterogeneous Panels with Multiple Regressors," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 61(0), pages 653-670, Special I.
    34. Lee, Chi-Chuan & Lee, Chien-Chiang & Chiou, Yan-Yu, 2017. "Insurance activities, globalization, and economic growth: New methods, new evidence," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 51(C), pages 155-170.
    35. Donghui Li & Fariborz Moshirian & Pascal Nguyen & Timothy Wee, 2007. "The Demand for Life Insurance in OECD Countries," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 74(3), pages 637-652, September.
    36. Emily Norman Zietz, 2003. "An Examination of the Demand for Life Insurance," Risk Management and Insurance Review, American Risk and Insurance Association, vol. 6(2), pages 159-191, September.
    37. Blau, Francine D. & Kahn, Lawrence M., 2013. "Female Labor Supply: Why is the US Falling Behind?," IZA Discussion Papers 7140, Institute of Labor Economics (IZA).
    38. Simona Laura Dragoş & Codruţa Mare & Cristian Mihai Dragoş, 2019. "Institutional drivers of life insurance consumption: a dynamic panel approach for European countries," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 44(1), pages 36-66, January.
    39. Ana Maria Santacreu, 2016. "Long-Run Economic Effects of Changes in the Age Dependency Ratio," Economic Synopses, Federal Reserve Bank of St. Louis, issue 17, pages 1-2.
    40. An, Chong-Bum & Jeon, Seung-Hoon, 2006. "Demographic change and economic growth: An inverted-U shape relationship," Economics Letters, Elsevier, vol. 92(3), pages 447-454, September.
    41. Savina Gygli & Florian Haelg & Jan-Egbert Sturm, 2018. "The KOF Globalisation Index – Revisited," KOF Working papers 18-439, KOF Swiss Economic Institute, ETH Zurich.
    42. Rudolf Enz, 2000. "The S-Curve Relation Between Per-Capita Income and Insurance Penetration," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 25(3), pages 396-406, July.
    43. Warren C. Sanderson & Sergei Scherbov, 2015. "Are We Overly Dependent on Conventional Dependency Ratios?," Population and Development Review, The Population Council, Inc., vol. 41(4), pages 687-708, December.
    44. Chen, Sen-Sung & Cheng, Shu-Ching & Pan, Guochen & Wu, Tsung-Pao, 2013. "The relationship between globalization and insurance activities: A panel data analysis," Japan and the World Economy, Elsevier, vol. 28(C), pages 151-157.
    45. Thorsten Beck & Ian Webb, 2003. "Economic, Demographic, and Institutional Determinants of Life Insurance Consumption across Countries," The World Bank Economic Review, World Bank, vol. 17(1), pages 51-88, June.
    46. Chi-Hung Chang & Chien-Chiang Lee, 2012. "Non-Linearity Between Life Insurance and Economic Development: A Revisited Approach," The Geneva Risk and Insurance Review, Palgrave Macmillan;International Association for the Study of Insurance Economics (The Geneva Association), vol. 37(2), pages 223-257, September.
    47. Lee, Chien-Chiang & Chiu, Yi-Bin, 2012. "The impact of real income on insurance premiums: Evidence from panel data," International Review of Economics & Finance, Elsevier, vol. 21(1), pages 246-260.
    48. Blau Francine D & Kahn Lawrence M, 2007. "The Gender Pay Gap," The Economists' Voice, De Gruyter, vol. 4(4), pages 1-6, June.
    49. Lewis, Frank D, 1989. "Dependents and the Demand for Life Insurance," American Economic Review, American Economic Association, vol. 79(3), pages 452-467, June.
    50. Nicole Maestas & Kathleen J. Mullen & David Powell, 2016. "The Effect of Population Aging on Economic Growth, the Labor Force and Productivity," NBER Working Papers 22452, National Bureau of Economic Research, Inc.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Rudra P. Pradhan & Mak B. Arvin & Sahar Bahmani & Sara E. Bennett & John H. Hall, 2017. "Insurance–growth nexus and macroeconomic determinants: evidence from middle-income countries," Empirical Economics, Springer, vol. 52(4), pages 1337-1366, June.
    2. Rudra P. Pradhan & Saurav Dash & Rana Pratap Maradana & Manju Jayakumar & Kunal Gaurav, 2017. "Insurance market density and economic growth in Eurozone countries: the granger causality approach," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 3(1), pages 1-24, December.
    3. Pradhan, Rudra P. & Arvin, Mak B. & Norman, Neville R., 2015. "Insurance development and the finance-growth nexus: Evidence from 34 OECD countries," Journal of Multinational Financial Management, Elsevier, vol. 31(C), pages 1-22.
    4. Rudra P. Pradhan, Mak B. Arvin, John H. Hall and Neville R. Norman, 2017. "Insurance Market Development and Macroeconomic Interactions in Twenty-Six Countries," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 42(4), pages 23-57, December.
    5. Lee, Chien-Chiang & Chiu, Yi-Bin, 2016. "Globalization and insurance activity: Evidence on the industrial and emerging countries," The North American Journal of Economics and Finance, Elsevier, vol. 36(C), pages 328-349.
    6. J. François Outreville, 2013. "The Relationship Between Insurance and Economic Development: 85 Empirical Papers for a Review of the Literature," Risk Management and Insurance Review, American Risk and Insurance Association, vol. 16(1), pages 71-122, March.
    7. Pradhan, Rudra P. & Arvin, B. Mak & Norman, Neville R. & Nair, Mahendhiran & Hall, John H., 2016. "Insurance penetration and economic growth nexus: Cross-country evidence from ASEAN," Research in International Business and Finance, Elsevier, vol. 36(C), pages 447-458.
    8. J. François Outreville, 2011. "The relationship between insurance growth and economic development - 80 empirical papers for a review of the literature," ICER Working Papers 12-2011, ICER - International Centre for Economic Research.
    9. J. François Outreville, 2015. "The Relationship Between Relative Risk Aversion And The Level Of Education: A Survey And Implications For The Demand For Life Insurance," Journal of Economic Surveys, Wiley Blackwell, vol. 29(1), pages 97-111, February.
    10. Lee, Chien-Chiang & Chiu, Yi-Bin & Chang, Chi-Hung, 2013. "Insurance demand and country risks: A nonlinear panel data analysis," Journal of International Money and Finance, Elsevier, vol. 36(C), pages 68-85.
    11. Yuan, Cheng & Jiang, Yu, 2020. "The marginal propensity to insure: An international analysis," International Review of Economics & Finance, Elsevier, vol. 69(C), pages 102-109.
    12. J. Francois Outreville, 2014. "Risk Aversion, Risk Behavior, and Demand for Insurance: A Survey," Journal of Insurance Issues, Western Risk and Insurance Association, vol. 37(2), pages 158-186.
    13. Lee, Chien-Chiang & Lee, Chi-Chuan & Chiu, Yi-Bin, 2013. "The link between life insurance activities and economic growth: Some new evidence," Journal of International Money and Finance, Elsevier, vol. 32(C), pages 405-427.
    14. Subir Sen & S Madheswaran, 2013. "Regional determinants of life insurance consumption: evidence from selected Asian economies," Asian-Pacific Economic Literature, The Crawford School, The Australian National University, vol. 27(2), pages 86-103, November.
    15. Gaganis, Chrysovalantis & Hasan, Iftekhar & Pasiouras, Fotios, 2020. "Cross-country evidence on the relationship between regulations and the development of the life insurance sector," Economic Modelling, Elsevier, vol. 89(C), pages 256-272.
    16. Relwende Sawadogo, Samuel Guerineau and Idrissa M. Ouedraogo, 2018. "Life Insurance Development and Economic Growth: Evidence from Developing Countries," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 43(2), pages 1-28, June.
    17. Flores, Eduardo & de Carvalho, João Vinicius França & Sampaio, Joelson Oliveira, 2021. "Impact of interest rates on the life insurance market development: Cross-country evidence," Research in International Business and Finance, Elsevier, vol. 58(C).
    18. Rangan Gupta & Amine Lahiani & Chi-Chuan Lee & Chien-Chiang Lee, 2019. "Asymmetric dynamics of insurance premium: the impacts of output and economic policy uncertainty," Empirical Economics, Springer, vol. 57(6), pages 1959-1978, December.
    19. Gabriela-Mihaela MURESAN, 2019. "Public Perception Of Insurance In Romania: A Survey Of Insurance Consumers And Non-Consumers," Annales Universitatis Apulensis Series Oeconomica, Faculty of Sciences, "1 Decembrie 1918" University, Alba Iulia, vol. 2(21), pages 1-5.
    20. Relwendé Sawadogo, 2021. "The relationship between insurance and banking sectors in Sub-Saharan African: Does globalization matter?," Economic Change and Restructuring, Springer, vol. 54(1), pages 101-119, February.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sae:sagope:v:10:y:2020:i:4:p:2158244020983024. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: SAGE Publications (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.