Optimal paternalistic health and human capital subsidy
Marcelo Arbex and
Enlinson Mattos
Economics Letters, 2019, vol. 176, issue C, 39-42
Abstract:
We characterize the first-best earnings subsidy when agents are heterogeneous with respect to present-biased preferences and cognitive skills. When agents’ health and human capital biased allocations affect not only welfare but also their labor earnings, a single subsidy corrects for agents’ mistaken decisions. We highlight two novel features of paternalistic interventions: the effects of agents’ decisions on the economy’s supply side, through future productivity, and the role of cognitive skills on individual’s optimal trade-off between human capital accumulation and leisure. We compare this optimal subsidy to an alternative policy package.
Keywords: Paternalism; Optimal taxation; Education; Health (search for similar items in EconPapers)
JEL-codes: D61 D91 H21 I18 I28 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)
Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0165176518304944
Full text for ScienceDirect subscribers only
Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
HTML/Text
Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:176:y:2019:i:c:p:39-42
DOI: 10.1016/j.econlet.2018.12.006
Access Statistics for this article
Economics Letters is currently edited by Economics Letters Editorial Office
More articles in Economics Letters from Elsevier
Bibliographic data for series maintained by Catherine Liu ().