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Wives, husbands and wheelchairs : Optimal tax policy under gender-specific health

  • LEROUX, Marie - Louise

    ()

    (Université catholique de Louvain, CORE, B-1348 Louvain-la-Neuve, Belgium)

  • PONTHIERE, Grégory

    ()

    (Paris School of Economics and Ecole Normale Supérieure, Paris)

We study the optimal taxation problem in an economy composed of two-person households (men and women), where agents influence their own old-age dependency prospects through health spending. It is shown that the utilitarian social optimum can be decentralized by means of lump sum transfers from men to women, because women exhibit a higher disability-free life expectancy than men for a given level of health spending. Once self-oriented concerns for coexistence are introduced, the decentralization of the first-best requires also gender-specific subsidies on health spending aimed at internalizing the effect of each agent's health on the spouse's welfare. In the presence of singles in the population, the optimal policy requires also a differentiated subsidization of health spending for singles and couples. Finally, under imperfect observability of couples, the incentive compatibility constraints reinforce the need for subsidization of health spendings

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Paper provided by Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) in its series CORE Discussion Papers with number 2009071.

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Date of creation: 01 Nov 2009
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Handle: RePEc:cor:louvco:2009071
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  1. Michael J. Boskin & Eytan Sheshinski, 1979. "Optimal Tax Treatment of the Family: Married Couples," NBER Working Papers 0368, National Bureau of Economic Research, Inc.
  2. Bommier, Antoine & Leroux, Marie-Louise & Lozachmeur, Jean-Marie, 2009. "On the Public Economics of Annuities with Differential Mortality," TSE Working Papers 09-021, Toulouse School of Economics (TSE).
  3. Richard Blundell & Martin Browning & Costas Meghir, 1994. "Consumer Demand and the Life-Cycle Allocation of Household Expenditures," Review of Economic Studies, Oxford University Press, vol. 61(1), pages 57-80.
  4. Marie-Louise Leroux & Pierre Pestieau & Grégory Ponthière, 2008. "Should we subsidize longevity?," PSE Working Papers halshs-00586236, HAL.
  5. Gregory Ponthiere, 2007. "Measuring longevity achievements under welfare interdependencies: a case for joint life expectancy indicators," Social Indicators Research- An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 84(2), pages 203-230, November.
  6. Ada Ferrer-i-Carbonell & Bernard M.S. van Praag, 2002. "The subjective costs of health losses due to chronic diseases. An alternative model for monetary appraisal," Health Economics, John Wiley & Sons, Ltd., vol. 11(8), pages 709-722.
  7. LEROUX, Marie-Louise & PONTHIERE, Gregory, . "Optimal tax policy and expected longevity: a mean and variance utility approach," CORE Discussion Papers RP 2158, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  8. repec:hal:wpaper:halshs-00586236 is not listed on IDEAS
  9. LEROUX, Marie-Louise & PONTHIERE, Grégory, 2008. "Optimal tax policy and expected longevity: a mean and variance approach," CORE Discussion Papers 2008039, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  10. PESTIEAU, Pierre & SATO, Motohiro, 2004. "Long term care: the state, the market and the family," CORE Discussion Papers 2004082, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  11. d’ASPREMONT, Claude & DOS SANTOS FERREIRA, Rodolphe, 2009. "Household behavior and individual autonomy," CORE Discussion Papers 2009022, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  12. JOUSTEN, Alain & LIPSZYC, Barbara & MARCHAND, Maurice & PESTIEAU, Pierre, . "Long-term care insurance and optimal taxation for altruistic children," CORE Discussion Papers RP 1753, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  13. Helmuth Cremer & Jean-Marie Lozachmeur & Pierre Pestieau, 2012. "Income taxation of couples and the tax unit choice," Journal of Population Economics, Springer;European Society for Population Economics, vol. 25(2), pages 763-778, January.
  14. Apps, Patricia & Rees, Ray, 2007. "The Taxation of Couples," IZA Discussion Papers 2910, Institute for the Study of Labor (IZA).
  15. Duée, Michel & Rebillard, Cyril & Pennec, Sophie, 2005. "Les personnes dépendantes en France : Evolution et prise en charge
    [Old-age disability in France: Long-term evolution, private caregiving and public expenditure]
    ," MPRA Paper 69877, University Library of Munich, Germany.
  16. Henrik Jacobsen Kleven & Claus Thustrup Kreiner & Emmanuel Saez, 2009. "The Optimal Income Taxation of Couples," Econometrica, Econometric Society, vol. 77(2), pages 537-560, 03.
  17. Nils Braakmann, 2009. "Other-Regarding Preferences, Spousal Disability and Happiness: Evidence from German Couples," SOEPpapers on Multidisciplinary Panel Data Research 194, DIW Berlin, The German Socio-Economic Panel (SOEP).
  18. Rees, Ray, 1988. "Taxation and the Household," Munich Reprints in Economics 3411, University of Munich, Department of Economics.
  19. Patricia F. Apps & Ray Rees, 1999. "Individual versus Joint Taxation in Models with Household Production," Journal of Political Economy, University of Chicago Press, vol. 107(2), pages 393-403, April.
  20. repec:pse:psecon:2008-46 is not listed on IDEAS
  21. Apps, Patricia F. & Rees, Ray, 1988. "Taxation and the household," Journal of Public Economics, Elsevier, vol. 35(3), pages 355-369, April.
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