This Paper starts from the result of Rochet (1989), that with distortionary income taxes social insurance is a desirable redistributive device when risk and ability are negatively correlated. This finding is re-examined when ex post moral hazard and adverse selection are included, and under different informational assumptions. Individuals can take actions influencing the size of the loss in the event of accident (or ill health). Social insurance can be supplemented by private insurance, but private insurance markets are affected by both adverse selection and moral hazard. The main purpose of the present Paper is to study how equity and efficiency considerations should be traded off in choosing the optimal coverage of social insurance when those features are introduced.
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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number
4253.
Find related papers by JEL classification: H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies H51 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Health
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References listed on IDEAS 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.:
Cutler, David M., 2002.
"Health care and the public sector,"
Handbook of Public Economics,
in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 4, chapter 31, pages 2143-2243
Elsevier.
[Downloadable!] (restricted)
Robin Boadway & Manuel Leite-Monteiro & Maurice Marchand & Pierre Pestieau, 2002.
"Social Insurance and Redistribution,"
Working Papers
1004, Queen's University, Department of Economics.
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Other versions:
BOADWAY, Robin & LEITE-MONTEIRO, Manuel & MARCHAND, Maurice & PESTIEAU, Pierre, 2001.
"Social insurance and redistribution,"
CORE Discussion Papers
2001041, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
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