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Long-term care insurance and optimal taxation for altruistic children

Author

Listed:
  • JOUSTEN, Alain
  • LIPSZYC, Barbara
  • MARCHAND, Maurice
  • PESTIEAU, Pierre

Abstract

We model long-term care insurance in an optimal taxation framework. Every adult decides upon the amount and type of care he purchases for his dependent parent. We consider two alternatives: nursing-home care provided by the government, and home care paid by the child with some lump-sum subsidy by the government. The only source of information asymmetry is the government's inability to observe the degree of altruism of the adult child for his/her parent. Further tax collection entails some social costs. In such a second-best setting, we show that the quality of institutional care has to be kept relatively low and that compared to altruistic children, nonaltruistic ones enjoy a high level of consumption.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • JOUSTEN, Alain & LIPSZYC, Barbara & MARCHAND, Maurice & PESTIEAU, Pierre, 2005. "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).
  • Handle: RePEc:cor:louvrp:1753 Note: In : FinanzArchiv, 61(1), 1-18, 2005
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    References listed on IDEAS

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    1. Paul A. Samuelson, 1958. "An Exact Consumption-Loan Model of Interest with or without the Social Contrivance of Money," Journal of Political Economy, University of Chicago Press, vol. 66, pages 467-467.
    2. Magill, Michael & Quinzii, Martine, 1994. "Infinite Horizon Incomplete Markets," Econometrica, Econometric Society, vol. 62(4), pages 853-880, July.
    3. BLOISE, Gaetano & DRÈZE, Jacques & POLEMARCHAKIS, Heracles, 2002. "Money and indeterminacy over an infinite horizon," CORE Discussion Papers 2002021, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    4. Magill, M. & Quinzii, M., 1992. "Real effects of money in general equilibrium," Journal of Mathematical Economics, Elsevier, vol. 21(4), pages 301-342.
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    Citations

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    Cited by:

    1. Elena Gentili & Giuliano Masiero & Fabrizio Mazzonna, 2016. "The Role of Culture in Long-term Care," IdEP Economic Papers 1605, USI Università della Svizzera italiana.
    2. repec:eee:jeborg:v:143:y:2017:i:c:p:186-200 is not listed on IDEAS
    3. Cremer, Helmuth & Pestieau, Pierre, 2014. "Means-tested long term care and family transfers," TSE Working Papers 14-492, Toulouse School of Economics (TSE).
    4. Chiara Canta & Pierre Pestieau & Emmanuel Thibault, 2016. "Long-term care and capital accumulation: the impact of the State, the market and the family," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 61(4), pages 755-785, April.
    5. De Donder, Philippe & Leroux, Marie-Louise, 2015. "The political choice of social long term care transfers when family gives time and money," TSE Working Papers 15-569, Toulouse School of Economics (TSE), revised 26 May 2015.
    6. Cremer, Helmuth & Pestieau, Pierre & Roeder, Kerstin, 2016. "Social long-term care insurance with two-sided altruism," Research in Economics, Elsevier, pages 101-109.
    7. Ponthiere Gregory, 2013. "Long-Term Care, Altruism and Socialization," The B.E. Journal of Economic Analysis & Policy, De Gruyter, pages 429-471.
    8. LEROUX, Marie - Louise & PONTHIERE, Grégory, 2009. "Wives, husbands and wheelchairs : Optimal tax policy under gender-specific health," CORE Discussion Papers 2009071, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    9. Helmuth Cremer & Pierre Pestieau, 2014. "Social long-term care insurance and redistribution," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 21(6), pages 955-974, December.
    10. Pierre Pestieau & Motohiro Sato, 2008. "Long-Term Care: the State, the Market and the Family," Economica, London School of Economics and Political Science, vol. 75(299), pages 435-454, August.
    11. Marie-Louise Leroux & Grégory Ponthiere, 2016. "Nursing Home Choice, Family Bargaining and Optimal Policy in a Hotelling Economy," CESifo Working Paper Series 5892, CESifo Group Munich.
    12. Canta Chiara & Pestieau Pierre, 2013. "Long-Term Care Insurance and Family Norms," The B.E. Journal of Economic Analysis & Policy, De Gruyter, pages 401-428.
    13. Philippe De Donder & Marie-Louise Leroux, 2015. "The Political Economy of (in)formal Long Term Care Transfers," Cahiers de recherche 1508, Chaire de recherche Industrielle Alliance sur les enjeux économiques des changements démographiques.
    14. CREMER, Helmuth & PESTIEAU, Pierre & PONTHIERE, Grégory, 2012. "The economics of long-term care: a survey," CORE Discussion Papers 2012030, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    15. repec:hal:wpaper:halshs-01131236 is not listed on IDEAS
    16. Kuhn, Michael & Nuscheler, Robert, 2011. "Optimal public provision of nursing homes and the role of information," Journal of Health Economics, Elsevier, vol. 30(4), pages 795-810, July.
    17. Pestieau, Pierre & Ponthiere, Gregory, 2016. "Long-term care and births timing," Journal of Health Economics, Elsevier, pages 340-357.
    18. Cremer, Helmuth & Roeder, Kerstin, 2013. "Long-term care policy, myopia and redistribution," Journal of Public Economics, Elsevier, pages 33-43.
    19. Axel Gautier, 2007. "Providing Long-term Care without Crowding-out Family Support and Private Insurance," CREPP Working Papers 0708, Centre de Recherche en Economie Publique et de la Population (CREPP) (Research Center on Public and Population Economics) HEC-Management School, University of Liège.
    20. Schwarze, Johannes, 2004. "Living Conditions of Children and Parental Well-Being – Evidence from German Data on Life Satisfaction," IZA Discussion Papers 1200, Institute for the Study of Labor (IZA).
    21. repec:spr:sochwe:v:49:y:2017:i:3:d:10.1007_s00355-016-0999-3 is not listed on IDEAS

    More about this item

    JEL classification:

    • D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy; Intergenerational Transfers
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

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