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Self-Selection and Optimal In-Sind Transfers

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  • Munro, Alistair

Abstract

With in-kind transfer self-selection schemes, agents choose between a set level of public provision or buy freely from the private market. Housing, education, and healthcare are often of this form. The optimal design of these schemes is analyzed here. It is shown that when a charge can be levied for the transfer, an optimal scheme will nearly always raise welfare, while freely provided transfers are unlikely to improve upon optimal linear taxation alone. Surprisingly, optimal schemes may involve high or medium income agents receiving public expenditure, while those on the lowest incomes opt out. Copyright 1992 by Royal Economic Society.

Suggested Citation

  • Munro, Alistair, 1992. "Self-Selection and Optimal In-Sind Transfers," Economic Journal, Royal Economic Society, vol. 102(414), pages 1184-1196, September.
  • Handle: RePEc:ecj:econjl:v:102:y:1992:i:414:p:1184-96
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    Cited by:

    1. Henry Ohlsson & Michael Lundholm, 1998. "Wages, taxes and publicly provided day care," Journal of Population Economics, Springer;European Society for Population Economics, vol. 11(2), pages 185-204.
    2. Sören Blömquist & Vidar Christiansen, 1998. "Price Subsidies Versus Public Provision," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 5(3), pages 283-306, July.
    3. Thum, Claudio & Thum, Marcel, 2001. " Repeated Interaction and the Public Provision of Private Goods," Scandinavian Journal of Economics, Wiley Blackwell, vol. 103(4), pages 625-643, December.
    4. Luciano G. Greco, 2011. "Optimal Redistribution with Productive Social Services," Scandinavian Journal of Economics, Wiley Blackwell, vol. 113(1), pages 55-73, March.
    5. Robin Boadway, 1998. "Redistributing Smarter: Self-Selection, Targeting and Non-Conventional Policy Instruments," Canadian Public Policy, University of Toronto Press, vol. 24(3), pages 365-369, September.
    6. Miller, Stephen M. & Neanidis, Kyriakos C., 2015. "Demographic transition and economic welfare: The role of in-cash and in-kind transfers," The Quarterly Review of Economics and Finance, Elsevier, vol. 58(C), pages 84-92.
    7. Hoel, Michael & Saether, Erik Magnus, 2003. "Public health care with waiting time: the role of supplementary private health care," Journal of Health Economics, Elsevier, vol. 22(4), pages 599-616, July.
    8. Simona GRASSI, 2006. "On the characteristics of a mixed system of provision of a private good. An application to health care," Departmental Working Papers 2006-14, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano.
    9. Zohal Hessami & Claudio Thum & Silke Uebelmesser, 2012. "A Political Economy Explanation for In-kind Redistribution: The Interplay of Corruption and Democracy," Working Paper Series of the Department of Economics, University of Konstanz 2012-25, Department of Economics, University of Konstanz.
    10. Zohal Hessami & Silke Uebelmesser, 2016. "A political-economy perspective on social expenditures: corruption and in-kind versus cash transfers," Economics of Governance, Springer, vol. 17(1), pages 71-100, February.
    11. Conning, Jonathan & Kevane, Michael, 2002. "Community-Based Targeting Mechanisms for Social Safety Nets: A Critical Review," World Development, Elsevier, vol. 30(3), pages 375-394, March.
    12. Mattos, Enlinson & Terra, Rafael, 2016. "Cash-cum-in-kind transfers and income tax function," Textos para discussão 414, FGV/EESP - Escola de Economia de São Paulo, Getulio Vargas Foundation (Brazil).
    13. Fabbri, Daniele & Monfardini, Chiara, 2009. "Rationing the public provision of healthcare in the presence of private supplements: Evidence from the Italian NHS," Journal of Health Economics, Elsevier, vol. 28(2), pages 290-304, March.
    14. Janet Currie & Firouz Gahvari, 2008. "Transfers in Cash and In-Kind: Theory Meets the Data," Journal of Economic Literature, American Economic Association, pages 333-383.
    15. Balestrino, Alessandro, 1999. " User Charges as Redistributive Devices," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 1(4), pages 511-524.
    16. Alessandro Balestrino, 2000. "Mixed Tax Systems and the Public Provision of Private Goods," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 7(4), pages 463-478, August.
    17. Ethan M.J. Lieber & Lee M. Lockwood, 2013. "Costs and Benefits of In-Kind Transfers: The Case of Medicaid Home Care Benefits," Working Papers wp294, University of Michigan, Michigan Retirement Research Center.
    18. Earl L. Grinols & Peri Silva, 2012. "Intervention Efficiency, Incentive Symmetry, and Information," Development Working Papers 334, Centro Studi Luca d'Agliano, University of Milano, revised 16 Jul 2012.
    19. Pinto, Santiago M., 2004. "Assistance to poor households when income is not observed: targeted in-kind and in-cash transfers," Journal of Urban Economics, Elsevier, vol. 56(3), pages 536-553, November.
    20. Cremer, Helmuth & Gahvari, Firouz, 1997. "In-kind transfers, self-selection and optimal tax policy," European Economic Review, Elsevier, vol. 41(1), pages 97-114, January.
    21. repec:spr:ecogov:v:17:y:2016:i:1:p:71-100 is not listed on IDEAS
    22. d'Andria, Diego, 2008. "The Debate on the Sustainability of Social Spending," MPRA Paper 11745, University Library of Munich, Germany.
    23. Calcott, Paul, 2000. "Health care evaluation, utilitarianism and distortionary taxes," Journal of Health Economics, Elsevier, vol. 19(5), pages 719-730, September.
    24. Edward N. Wolff & Ajit Zacharias, 2003. "The Levy Institute Measure of Economic Well-Being," Economics Working Paper Archive wp_372, Levy Economics Institute.
    25. Ethan M.J. Lieber & Lee M. Lockwood, 2017. "Targeting with In-kind Transfers: Evidence from Medicaid Home Care," Working Papers wp359, University of Michigan, Michigan Retirement Research Center.

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