Social long-term care insurance with two-sided altruism

Helmuth Cremer, Pierre Pestieau and Kerstin Roeder ()

No 2015046, LIDAM Discussion Papers CORE from Université catholique de Louvain, Center for Operations Research and Econometrics (CORE)

Abstract: This paper studies the design of a social long-term care (LTC) insurance when altruism is two-sided. The laissez-faire solution is not efficient, unless there is perfect altruism. Under full information, the first-best can be decentralized by a linear subsidy on informal aid, a linear tax on bequests when the parent is dependent and state specific lump-sum transfers which provide insurance. We also study a second-best scheme comprising a LTC benefit, a payroll tax on children’s earnings and an inheritance tax. This scheme redistributes resources across individuals and between the states of nature and the tax on children’s labor enhances informal care to compensate for the children’s possible less than full altruism.

Keywords: long-term care; social insurance; two-sided altruism (search for similar items in EconPapers)
JEL-codes: H2 H5 (search for similar items in EconPapers)
Date: 2015-10-21
New Economics Papers: this item is included in nep-hea, nep-ias, nep-net and nep-pbe
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Related works:
Journal Article: Social long-term care insurance with two-sided altruism (2016)
Working Paper: Social Long-term Care Insurance with Two-sided Altruism (2016)
Working Paper: Social long-term care insurance with two-sided altruism (2015)
Working Paper: Social long-term care insurance with two-sided altruism (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:cor:louvco:2015046

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