Endogenous altruism, redistribution, and long term care
AbstractThis paper studies public provision of long term care insurance in a world in which family assistance is (i) uncertain and (ii) endogenous depending on the time parents spend raising their children. Public benefits will be paid in case of disability but cannot be combined with self-insurance or family aid. The benefits are provided equally to all recipients and financed by a proportional payroll tax. The paper shows that tax distortions imply that full insurance is undesirable. It characterizes the optimal tax and identifies the elements that determine its size. Of crucial importance are the extent of under-insurance, the effect of the tax on the probability of altruism, the distortionary effect of the tax, and, with wage heterogeneity, the covariance between the social mar- ginal utility of lifetime income and (i) earnings (positive effect) and (ii) the probability of altruism default (negative effect).
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Bibliographic InfoPaper provided by Institut d'Économie Industrielle (IDEI), Toulouse in its series IDEI Working Papers with number 768.
Date of creation: Mar 2013
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Other versions of this item:
- Cremer, Helmuth & Gahvari, Firouz & Pestieau, Pierre, 2013. "Endogenous altruism, redistribution, and long term care," TSE Working Papers 13-386, Toulouse School of Economics (TSE).
- H2 - Public Economics - - Taxation, Subsidies, and Revenue
- H5 - Public Economics - - National Government Expenditures and Related Policies
This paper has been announced in the following NEP Reports:
- NEP-AGE-2013-04-20 (Economics of Ageing)
- NEP-ALL-2013-04-20 (All new papers)
- NEP-HEA-2013-04-20 (Health Economics)
- NEP-IAS-2013-04-20 (Insurance Economics)
- NEP-PBE-2013-04-20 (Public Economics)
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.:
- LEROUX, Marie-Louise & PESTIEAU, Pierre, 2011. "Social security and family support," CORE Discussion Papers 2011045, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- CREMER, Helmuth & gahvari, Firouz & PESTIEAU, Pierre, 2013. "Uncertain altruism and the provision of long term care," CORE Discussion Papers 2013047, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
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