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Harsh occupations, health status and social security

Author

Listed:
  • PESTIEAU, Pierre

    (CREPP, Université de Liège, Belgium; Université catholique de Louvain, CORE, Belgium)

  • RACIONERO, Maria

    (Research School of Economics, Australian National University)

Abstract

We study the optimal design of a social security system when individuals differ in health status and occupation. Health status is private information but is imperfectly correlated with occupation: individuals in harsh occupations are more likely to be in poor health. We explore the desirability of letting the social security policy differ by occupation and compare the results with those obtained when disability tests are used instead. We show that tagging by occupation is preferable to testing when the audit technology is relatively expensive and/or the proportion of disabled workers differs markedly across occupations. We also study the implications of imposing horizontal equity among disabled workers and show that those in the harsh occupation may be induced to retire later.

Suggested Citation

  • PESTIEAU, Pierre & RACIONERO, Maria, 2013. "Harsh occupations, health status and social security," LIDAM Discussion Papers CORE 2013001, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    • Handle: RePEc:cor:louvco:2013001
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    References listed on IDEAS

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    1. Fleurbaey,Marc & Maniquet,François, 2011. "A Theory of Fairness and Social Welfare," Cambridge Books, Cambridge University Press, number 9780521715348, January.
    2. Duranton, Gilles & Martin, Philippe & Mayer, Thierry & Mayneris, Florian, 2010. "The Economics of Clusters: Lessons from the French Experience," OUP Catalogue, Oxford University Press, number 9780199592203.
    3. Cremer Helmuth & Lozachmeur Jean-Marie & Pestieau Pierre, 2007. "Disability Testing and Retirement," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 7(1), pages 1-34, February.
    4. Asghar Zaidi & Edward Whitehouse, 2009. "Should Pension Systems Recognise "Hazardous and Arduous Work"?," OECD Social, Employment and Migration Working Papers 91, OECD Publishing.
    5. Lumsdaine, Robin L. & Mitchell, Olivia S., 1999. "New developments in the economic analysis of retirement," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 49, pages 3261-3307, Elsevier.
    6. Cremer, Helmuth & Lozachmeur, Jean-Marie & Pestieau, Pierre, 2004. "Social security, retirement age and optimal income taxation," Journal of Public Economics, Elsevier, vol. 88(11), pages 2259-2281, September.
    7. Thierry Debrand & Pascale Lengagne, 2008. "Working Conditions and Health of European Older Workers," Working Papers DT8, IRDES institut for research and information in health economics, revised Feb 2008.
    8. Agar Brugiavini & Tullio Jappelli & Guglielmo Weber, 2002. "The Survey on Health, Aging and Wealth," CSEF Working Papers 86, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
    9. Gaertner,Wulf & Schokkaert,Erik, 2011. "Empirical Social Choice," Cambridge Books, Cambridge University Press, number 9781107013940, January.
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    Citations

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    Cited by:

    1. Wei-Bin Zhang, 2018. "Health, Environment, and Wealth," Izvestia Journal of the Union of Scientists - Varna. Economic Sciences Series, Union of Scientists - Varna, Economic Sciences Section, vol. 7(3), pages 109-123, December.
    2. Igor Fedotenkov, 2019. "Optimal asymmetric sector-specific labour taxation in an overlapping generations model," Journal of Economics, Springer, vol. 127(1), pages 1-18, June.
    3. Magnani, Marco, 2024. "An analysis of precautionary behavior in retirement decision making with an application to pension system reform," Insurance: Mathematics and Economics, Elsevier, vol. 117(C), pages 99-113.
    4. Marie-Louise Leroux & Pierre Pestieau & Grégory Ponthière, 2015. "Longévité différentielle et redistribution : enjeux théoriques et empiriques," L'Actualité Economique, Société Canadienne de Science Economique, vol. 91(4), pages 465-497.
    5. Pestieau, Pierre & Racionero, Maria, 2016. "Harsh occupations, life expectancy and social security," Economic Modelling, Elsevier, vol. 58(C), pages 194-202.
    6. Youngsoo Jang & Svetlana Pashchenko & Ponpoje Porapakkarm, 2023. "Mortality Regressivity and Pension Design," Working Papers 2023-023, Human Capital and Economic Opportunity Working Group.

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    More about this item

    Keywords

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    JEL classification:

    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions

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