We study formal and informal insurance in Iraq using empirical data from a
household survey. We study access to social security, health insurance, and retirement. Then, we examine the types of risks that Iraqi households face, and the informal coping mechanisms they use to deal with them.
After studying formal and informal social protection separately, we study the relationship between the two and test the hypothesis of crowding out. We find that socio-demographic characteristics affect formal insurance detention, the probability of a risk occurring, and the type of risk coping mechanism that a household uses. The most important determinant of receiving formal benefits
is
the sector of employment: public sector
workers are between 83% and 84% more likely than private sector workers to have
formal benefits.
Poverty, the type of employment, the place of
residence, the size of
the household, the gender of the household head, and the education of the
household impact the probability with which a household is affected by different
types of risks. These socio
-‐
demographic characteristics along with the type of
risk
that the household faced influence the household’s choice of risk coping mechanism.
We find evidence of crowding out; however, we conclude that this should not
translate to a reduction in formal safety nets.
Our results have many policy
implications
to improve access to formal insurance, reduce risks, and mitigate the
negative aspects of certain informal coping mechanisms
in Iraq
.
