Harsh occupations, health status and social security

Maria Racionero and Pierre Pestieau

No 672, CEPR Discussion Papers from Centre for Economic Policy Research, 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. The health status is private information but is imperfectly correlated with occupation: individuals in harsh occupations have a higher probability of being in poor health. We explore the desirability of allowing the social security policy to differ by occupation and compare the results with those obtained if disability tests are used instead. We show that tagging by occupation is preferable to disability testing when the audit technology is relatively expensive and/or the ratio of disabled to healthy workers is significantly different across occupations. We also study the implications of imposing horizontal equity among disabled workers in different occupations and show that the disabled workers in harsher occupations may be induced to retire later.

Keywords: health status; retirement are; tagging; disability tests (search for similar items in EconPapers)
JEL-codes: H21 H55 (search for similar items in EconPapers)
Date: 2012-11
New Economics Papers: this item is included in nep-age, nep-cta and nep-hea
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https://www.cbe.anu.edu.au/researchpapers/CEPR/DP672.pdf (application/pdf)

Related works:
Working Paper: Harsh Occupations, Health Status and Social Security (2016)
Working Paper: Harsh occupations, health status and social security (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:auu:dpaper:672

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