Social Insurance with Risk-Reducing Investments
Dan Anderberg () and
Fredrik Andersson ()
Economica, 2000, vol. 67, issue 265, 37-56
A two-sector model with sector-dependent disability risks is presented. Working in the low-risk sector requires skills that can be obtained by investments in education. Moral hazard precludes full insurance. The labour force allocation is responsive to the incentives created by a social insurance system. The rationale for intervention lies in the government's power to cross-subsidize between the sectors, and it is demonstrated how the responsiveness of the labour force allocation limits cross-subsidization. The second-best policy is time-inconsistent. The consistent equilibrium is explored and is argued to provide weak incentives to reduce risks. Copyright 2000 by The London School of Economics and Political Science
References: Add references at CitEc
Citations View citations in EconPapers (4) Track citations by RSS feed
Downloads: (external link)
http://www.blackwell-synergy.com/servlet/useragent ... =265&year=&part=null link to full text (text/html)
Access to full text is restricted to subscribers.
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:bla:econom:v:67:y:2000:i:265:p:37-56
Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=0013-0427
Access Statistics for this article
Economica is currently edited by Frank Cowell, Tore Ellingsen and Alan Manning
More articles in Economica from London School of Economics and Political Science Contact information at EDIRC.
Series data maintained by Wiley-Blackwell Digital Licensing ().