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Incentives, Redistribution and Social Insurance

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Author Info
Jean-Charles Rochet (GREMAQ, Université de Toulouse, 1, Place Anatole France, 31042 Toulouse cedex, France)

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Abstract

We extend the familiar income taxation model à la Mirrlees, so as to include income uncertainty, due for instance to a risk of illness. Following a line of research initiated by Blomqvist and Horn [1984] we prove that the existence of a Social Health Insurance system may be justified even when the insurance market is efficient. Moreover, if there is a negative statistical dependence between probability of illness and labor productivity, then the optimum of a Utilitarianist Social Welfare function implies that Social Insurance provides a complete coverage for every household. The Geneva Papers on Risk and Insurance Theory (1991) 16, 143–165. doi:10.1007/BF02386304

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Article provided by Palgrave Macmillan Journals in its journal The Geneva Papers on Risk and Insurance Theory.

Volume (Year): 16 (1991)
Issue (Month): 2 (December)
Pages: 143-165
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Handle: RePEc:pal:genrir:v:16:y:1991:i:2:p:143-165

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  1. Friedrich Breyer & Andreas Haufler, 2000. "Health Care Reform: Separating Insurance from Income Redistribution," Discussion Papers of DIW Berlin 205, DIW Berlin, German Institute for Economic Research. [Downloadable!]
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