Sickness absence and health care in an economic federation
AbstractThis paper addresses vertical fiscal externalities in a model where the state governments provide health care and the federal government provides a sickness benefit. Both levels of government tax labor income and policy decisions affect labor income as well as participation in the labor market. The results show that the vertical externality affecting the state governments’ policy decisions can be either positive or negative depending on, among other things, the wage elasticity of labor supply and the marginal product of expenditure on health care. Moreover, it is proved that the vertical fiscal externality will not vanish by assigning all powers of taxation to the states. Copyright Springer Science+Business Media, LLC 2007
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Bibliographic InfoArticle provided by Springer in its journal International Tax and Public Finance.
Volume (Year): 14 (2007)
Issue (Month): 4 (August)
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Web page: http://www.springerlink.com/link.asp?id=102915
Economic federation; Moral hazard; Vertical fiscal externalities; Sickness absence; Sickness benefits; H2; H4; H7;
Find related papers by JEL classification:
- H2 - Public Economics - - Taxation, Subsidies, and Revenue
- H4 - Public Economics - - Publicly Provided Goods
- H7 - Public Economics - - State and Local Government; Intergovernmental Relations
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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- David Granlund, 2010. "The effect of health care expenditure on sickness absence," The European Journal of Health Economics, Springer, vol. 11(6), pages 555-568, December.
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