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Where Should the Elderly Live and Who Should Pay for their Care? A Study in Demographics and Geographical Economic

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Author Info

  • Aronsson, Thomas

    ()
    (Department of Economics, Umeå University)

  • Blomquist, Sören

    ()
    (Department of Economics, Uppsala University)

  • Micheletto, Luca

    ()
    (Istituto di Economia Politica, Università "L. Bocconi")

Abstract

There is a rich literature analyzing the problems that will arise as the share of elderly and retired in the population increases in the near future. However, the locational decisions among the elderly as well as their implications in terms of taxes/transfers and of allocation of responsibilities for elderly care between the federal and local levels have not received much attention. In this paper we aim at investigating these issues. For this purpose we explore a model where there is a big city and a set of small villages and where congestion effects and agglomeration forces are at work at the level of the big city. We also assume that the population is divided between two groups of agents, productive and retired, which differ with respect to the degree of mobility. In the first part of the paper we study and characterize the inefficiencies that arise because of individuals' free location choice in the context of a unitary government. In the second part of the paper we consider a fiscal federalism structure and we investigate the suitable instruments that are needed in order to decentralize the optimal allocation obtained under full centralization.

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Bibliographic Info

Paper provided by Umeå University, Department of Economics in its series Umeå Economic Studies with number 702.

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Length: 23 pages
Date of creation: 25 Jan 2007
Date of revision:
Handle: RePEc:hhs:umnees:0702

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Postal: Department of Economics, Umeå University, S-901 87 Umeå, Sweden
Phone: 090 - 786 61 42
Fax: 090 - 77 23 02
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Web page: http://www.econ.umu.se/
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Keywords: Agglomeration effects; congestion; elderly care; fiscal federalism;

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  1. Wellisch, Dietmar, 1994. "Interregional spillovers in the presence of perfect and imperfect household mobility," Journal of Public Economics, Elsevier, vol. 55(2), pages 167-184, October.
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  7. R. Boadway & K. Cuff & M. Marchand, 2001. "Equalization and the Decentralization of Revenue-Raising in a Federation," Department of Economics Working Papers 2001-04, McMaster University.
  8. Antonio Ciccone & Robert E. Hall, 1996. "Productivity and the Density of Economic Activity," NBER Working Papers 4313, National Bureau of Economic Research, Inc.
  9. Topel, Robert H, 1986. "Local Labor Markets," Journal of Political Economy, University of Chicago Press, vol. 94(3), pages S111-43, June.
  10. Bev Dahlby, 1996. "Fiscal externalities and the design of intergovernmental grants," International Tax and Public Finance, Springer, vol. 3(3), pages 397-412, July.
  11. Bergstrom, T. & Blomquist, S., 1993. "The Political Economy of Subsidized Day Care," Papers 93-30, Michigan - Center for Research on Economic & Social Theory.
  12. Thomas Aronsson & Magnus Wikström, 2001. "Optimal Taxes and Transfers in a Multilevel Public Sector," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 58(2), pages 158-, February.
  13. Hansson, Ingemar & Stuart, Charles, 1987. "The suboptimality of local taxation under two-tier fiscal federalism," European Journal of Political Economy, Elsevier, vol. 3(3), pages 407-411.
  14. Lindbeck, Assar & Weibull, Jorgen W, 1988. "Altruism and Time Consistency: The Economics of Fait Accompli," Journal of Political Economy, University of Chicago Press, vol. 96(6), pages 1165-82, December.
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  20. repec:fth:louvco:9803 is not listed on IDEAS
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Citations

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Cited by:
  1. Blomquist, Sören & Christiansen, Vidar, 2007. "Public Provision of Private Goods and Nondistortionary Marginal Tax Rates," Working Paper Series 2007:7, Uppsala University, Department of Economics.
  2. Ohlsson, Henry, 2011. "The legacy of the Swedish gift and inheritance tax, 1884–2004," European Review of Economic History, Cambridge University Press, vol. 15(03), pages 539-569, December.
  3. Ronald D. Kneebone, 2007. "Following the Money Federal and Provincial Budget Balances with Canada’s Major Cities," C.D. Howe Institute Commentary, C.D. Howe Institute, issue 249, June.

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