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Optimal Social Insurance and Health Inequality

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  • Volker Grossmann
  • Holger Strulik

Abstract

This paper integrates into public economics a biologically founded, stochastic process of individual ageing. The novel approach enables us to investigate the interaction between health and retirement policy in order to quantitatively characterize the optimal joint design of the social insurance system today and in response to future medical progress, and its implications for health inequality. Calibrating our model to Germany, we find that currently the public health and pension system is approximately optimal. Future progress in medical technology calls for a potentially drastic increase in health spending that typically shall be accompanied with a lower pension savings rate and a higher retirement age. Medical progress and higher health spending is predicted to lead to more health inequality.

Suggested Citation

  • Volker Grossmann & Holger Strulik, 2015. "Optimal Social Insurance and Health Inequality," CESifo Working Paper Series 5604, CESifo Group Munich.
  • Handle: RePEc:ces:ceswps:_5604
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Johannes Schuenemann & Holger Strulik & Timo Trimborn, . "The Marriage Gap: Optimal Aging and Death in Partnerships," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics.
    2. Schünemann, Johannes & Strulik, Holger & Trimborn, Timo, 2017. "The gender gap in mortality: How much is explained by behavior?," Journal of Health Economics, Elsevier, vol. 54(C), pages 79-90.
    3. Trimborn, Timo & Schünemann, Johannes & Strulik, Holger, 2016. "Disentangling the Gender Gap in Longevity," Annual Conference 2016 (Augsburg): Demographic Change 145570, Verein für Socialpolitik / German Economic Association.

    More about this item

    Keywords

    ageing; health expenditure; health inequality; social security system; retirement age;

    JEL classification:

    • H50 - Public Economics - - National Government Expenditures and Related Policies - - - General
    • I10 - Health, Education, and Welfare - - Health - - - General
    • C60 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - General

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