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Where Should the Elderly Live and Who Should Pay for their Care? A Study in Demographics and Geographical Economics

Author

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  • Aronsson, Thomas

    () (Department of Economics)

  • Blomquist, Sören

    () (Department of Economics)

  • Micheletto, Luca

    () (Istituto di Scienze Economiche e Statistiche,)

Abstract

There is a rich literature analyzing the problems that will arise as the share of elderly and retired in the population increases in the near future. However, the locational decisions among the elderly as well as their implications in terms of taxes/transfers and of allocation of responsibilities for elderly care between the federal and local levels have not received much attention. In this paper we aim at investigating these issues. For this purpose we explore a model where there is a big city and a set of small villages, and where congestion effects and agglomeration forces are at work at the level of the big city. We also assume that the population is divided between two groups of agents, workers and retired, which differ with respect to the degree of mobility. In the first part of the paper we study and characterize the inefficiencies that arise because of individuals’ free location choice in the context of a unitary government. In the second part of the paper we consider a fiscal federalism structure and we investigate the suitable instruments that are needed in order to decentralize the optimal allocation obtained under full centralization.

Suggested Citation

  • Aronsson, Thomas & Blomquist, Sören & Micheletto, Luca, 2007. "Where Should the Elderly Live and Who Should Pay for their Care? A Study in Demographics and Geographical Economics," Working Paper Series 2007:6, Uppsala University, Department of Economics.
  • Handle: RePEc:hhs:uunewp:2007_006
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    References listed on IDEAS

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    Cited by:

    1. Ohlsson, Henry, 2011. "The legacy of the Swedish gift and inheritance tax, 1884–2004," European Review of Economic History, Cambridge University Press, vol. 15(03), pages 539-569, December.
    2. Sören Blomquist & Vidar Christiansen & Luca Micheletto, 2010. "Public Provision of Private Goods and Nondistortionary Marginal Tax Rates," American Economic Journal: Economic Policy, American Economic Association, vol. 2(2), pages 1-27, May.
    3. Ronald D. Kneebone, 2007. "Following the Money Federal and Provincial Budget Balances with Canada’s Major Cities," C.D. Howe Institute Commentary, C.D. Howe Institute, issue 249, June.

    More about this item

    Keywords

    agglomeration effects; congestion; elderly care; fiscal federalism;

    JEL classification:

    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • H42 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Private Goods
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism
    • J10 - Labor and Demographic Economics - - Demographic Economics - - - General

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