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Harsh occupations, health status and social security

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  • PESTIEAU, Pierre

    (CREPP, Université de Liège, Belgium; Université catholique de Louvain, CORE, Belgium)

  • RACIONERO, Maria

    ()
    (Research School of Economics, Australian National University)

Abstract

We study the optimal design of a social security system when individuals differ in health status and occupation. Health status is private information but is imperfectly correlated with occupation: individuals in harsh occupations are more likely to be in poor health. We explore the desirability of letting the social security policy differ by occupation and compare the results with those obtained when disability tests are used instead. We show that tagging by occupation is preferable to testing when the audit technology is relatively expensive and/or the proportion of disabled workers differs markedly across occupations. We also study the implications of imposing horizontal equity among disabled workers and show that those in the harsh occupation may be induced to retire later.

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Bibliographic Info

Paper provided by Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) in its series CORE Discussion Papers with number 2013001.

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Date of creation: 22 Feb 2013
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Handle: RePEc:cor:louvco:2013001

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Keywords: health status; retirement age; tagging; disability tests;

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  1. Asghar Zaidi & Edward R. Whitehouse, 2009. "Should Pension Systems Recognise "Hazardous and Arduous Work"?," OECD Social, Employment and Migration Working Papers 91, OECD Publishing.
  2. Cremer, Helmuth & Lozachmeur, Jean-Marie & Pestieau, Pierre, 2004. "Disability Testing and Retirement," IDEI Working Papers 281, Institut d'Économie Industrielle (IDEI), Toulouse.
  3. Thierry Debrand & Pascale Lengagne, 2008. "Working Conditions and Health of European Older Workers," Working Papers DT8, IRDES institut for research and information in health economics, revised Feb 2008.
  4. Cremer, Helmuth & Lozachmeur, Jean-Marie & Pestieau, Pierre, 2004. "Social security, retirement age and optimal income taxation," Journal of Public Economics, Elsevier, vol. 88(11), pages 2259-2281, September.
  5. Duranton, Gilles & Martin, Philippe & Mayer, Thierry & Mayneris, Florian, 2010. "The Economics of Clusters: Lessons from the French Experience," OUP Catalogue, Oxford University Press, number 9780199592203, September.
  6. Fleurbaey,Marc & Maniquet,François, 2011. "A Theory of Fairness and Social Welfare," Cambridge Books, Cambridge University Press, number 9780521887427, April.
  7. Agar Brugiavini & Tullio Jappelli & Guglielmo Weber, 2002. "The Survey on Health, Aging and Wealth," CSEF Working Papers 86, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
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