We consider social insurance schemes with a two-part benefit formula: a flat (constant) term and a variable term which is proportional to individuals' contributions. The factor of proportionality defines the type of social insurance. We adopt a two-stage political economy approach. At the first, constitutional stage, the type of social insurance is chosen "behind the veil of ignorance", according to the Rawlsian or the utilitarian criterion. At this stage, private insurance can also be prohibited or allowed. At the second stage, tax rate and benefits level are chosen by majority voting.
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Paper provided by Catholique de Louvain - Center for Operations Research and Economics in its series Papers with number
9838.
Length: Date of creation: 1998 Date of revision: Handle: RePEc:fth:louvco:9838
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Find related papers by JEL classification: E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook E65 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Studies of Particular Policy Episodes H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
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