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Social Insurance and Redistribution

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Author Info

  • Robin Boadway

    ()
    (Department of Economics, Queen's University)

  • Manuel Leite-Monteiro

    (Universidade Cat´olica Portuguesa)

  • Maurice Marchand

    (CORE, Universit´e catholique de Louvain)

  • Pierre Pestieau

    (CREPP, Universit´e de Li`ege, COREand DELTA)

Abstract

This paper studies optimal linear income taxation and redistributive social insurance when the former has the traditional labor distortion and the latter generates both ex ante and ex post moral hazard. Private insurance is available and individuals differ in labor productivity and in loss probability. We show that government intervention in insurance markets is welfare-improving, and social insurance is generally desirable when there is a negative correlation between labor productivity and loss probability.

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File URL: http://qed.econ.queensu.ca/working_papers/papers/qed_wp_1004.pdf
File Function: First version 2002
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Bibliographic Info

Paper provided by Queen's University, Department of Economics in its series Working Papers with number 1004.

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Length: 29 pages
Date of creation: Apr 2002
Date of revision:
Handle: RePEc:qed:wpaper:1004

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Related research

Keywords: Social Insurance; Moral Hazard; Redistribution;

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References

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  1. Martin Gaynor & Deborah Haas-Wilson & William B. Vogt, 1998. "Are Invisible Hands Good Hands? Moral Hazard, Competition, and the Second Best in Health Care Markets," NBER Working Papers 6865, National Bureau of Economic Research, Inc.
  2. Helmuth Cremer & Pierre Pestieau, 1996. "Redistributive taxation and social insurance," International Tax and Public Finance, Springer, vol. 3(3), pages 281-295, July.
  3. Richard J. Arnott & Joseph E. Stiglitz, 1986. "Moral Hazard and Optimal Commodity Taxation," NBER Working Papers 1154, National Bureau of Economic Research, Inc.
  4. Hindriks, Jean & De Donder, Philippe, 2003. "The politics of redistributive social insurance," Journal of Public Economics, Elsevier, vol. 87(12), pages 2639-2660, December.
  5. Robin W. Boadway, 1994. "The Role of Second-Best Theory in Public Economics," Working Papers 910, Queen's University, Department of Economics.
  6. Mirrlees, James A, 1971. "An Exploration in the Theory of Optimum Income Taxation," Review of Economic Studies, Wiley Blackwell, vol. 38(114), pages 175-208, April.
  7. Boadway, Robin & Keen, Michael, 1993. "Public Goods, Self-Selection and Optimal Income Taxation," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 34(3), pages 463-78, August.
  8. Atkinson, Anthony B & Stern, N H, 1974. "Pigou, Taxation and Public Goods," Review of Economic Studies, Wiley Blackwell, vol. 41(1), pages 119-28, January.
  9. Marshall, John M, 1976. "Moral Hazard," American Economic Review, American Economic Association, vol. 66(5), pages 880-90, December.
  10. Olivia S. Mitchell, 1998. "Administrative Costs in Public and Private Retirement Systems," NBER Chapters, in: Privatizing Social Security, pages 403-456 National Bureau of Economic Research, Inc.
  11. Pauly, Mark V, 1974. "Overinsurance and Public Provision of Insurance: The Roles of Moral Hazard and Adverse Selection," The Quarterly Journal of Economics, MIT Press, vol. 88(1), pages 44-62, February.
  12. Diamond, Peter, 1992. "Organizing the Health Insurance Market," Econometrica, Econometric Society, vol. 60(6), pages 1233-54, November.
  13. Blomqvist, Ake & Horn, Henrik, 1984. "Public health insurance and optimal income taxation," Journal of Public Economics, Elsevier, vol. 24(3), pages 353-371, August.
  14. Arnott,Richard & Atkinson,Anthony B. & Arrow,Kenneth & Drèze,Jacques H. (ed.), 1997. "Public Economics Real Author-Name:Vickrey,William," Cambridge Books, Cambridge University Press, number 9780521597630, December.
  15. Petretto, Alessandro, 1999. "Optimal social health insurance with supplementary private insurance," Journal of Health Economics, Elsevier, vol. 18(6), pages 727-745, December.
  16. Dreze, Jean & Stern, Nicholas, 1987. "The theory of cost-benefit analysis," Handbook of Public Economics, in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 2, chapter 14, pages 909-989 Elsevier.
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Citations

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Cited by:
  1. F. Barigozzi, 2004. "Supplementary Insurance with Ex-Post Moral Hazard: Efficiency and Redistribution," Working Papers 521, Dipartimento Scienze Economiche, Universita' di Bologna.
  2. Susanna Kochskämper, 2012. "Reformdebatten in der Krankenversicherung vor dem Hintergrund des europäischen Binnenmarktes," Otto-Wolff-Institut Discussion Paper Series 02/2012, Otto-Wolff-Institut für Wirtschaftsordnung, Köln, Deutschland.
  3. CREMER, Helmuth & PESTIEAU, Pierre, . "Assurance privée et protection sociale," CORE Discussion Papers RP -1832, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  4. Billy Jack, 2003. "Redistributing to the sick: How should health expenditures be integrated into the tax system?," Working Papers gueconwpa~03-03-16, Georgetown University, Department of Economics.
  5. Koen Burggraeve & Philip Du Caju, 2003. "The labour market and fiscal impact of labour reductions: the case of reduction of employers' social security contributions under a wage norm regime with automatic price indexing of wages," Working Paper Research 36, National Bank of Belgium.
  6. Robin BOADWAY & Pierre PESTIEAU, 2006. "Tagging and redistributive taxation," Annales d'Economie et de Statistique, ENSAE, issue 83-84, pages 123-147.
  7. BOADWAY, Robin & LEITE-MONTEIRO, Manuel & MARCHAND, Maurice & PESTIEAU, Pierre, 2004. "Social insurance and redistribution with moral hazard and adverse selection," CORE Discussion Papers 2004083, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  8. Christian Keuschnigg & Evelyn Ribi, 2007. "Outsourcing, Unemployment and Welfare Policy," Working Papers 0720, Oxford University Centre for Business Taxation.
  9. Stéphanie Maillot-Bugnon, 2005. "Assurance maladie et redistribution : le cas de l'arrêt maladie," Recherches économiques de Louvain, De Boeck Université, vol. 71(4), pages 427-443.
  10. Kifmann, Mathias & Roeder, Kerstin, 2011. "Premium subsidies and social insurance: Substitutes or complements?," hche Research Papers 2011/01, Hamburg Center for Health Economics (hche), University of Hamburg.
  11. Anil Duman, 2010. "Risks in the labor market and social insurance preferences: Germany and the USA," International Journal of Social Economics, Emerald Group Publishing, vol. 37(2), pages 150-164, January.

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