Long-term Care Insurance and Optimal Taxation for Altruistic Children

Alain Jousten, Barbara Lipszyc, Maurice Marchand and Pierre Pestieau

FinanzArchiv: Public Finance Analysis, 2005, vol. 61, issue 1, 1-18

Abstract: We model long-term care insurance in an optimal taxation framework. Every adult decides upon the amount and type of care he purchases for his dependent parent. We consider two alternatives: nursing-home care provided by the government, and home care paid by the child with some lump-sum subsidy by the government. The only source of information asymmetry is the government's inability to observe the degree of altruism of the adult child for his/her parent. Further tax collection entails some social costs. In such a second-best setting, we show that the quality of institutional care has to be kept relatively low and that compared to altruistic children, nonaltruistic ones enjoy a high level of consumption.

Keywords: long-term care; altruism; social security (search for similar items in EconPapers)
JEL-codes: D64 H55 I18 (search for similar items in EconPapers)
Date: 2005
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Citations: View citations in EconPapers (58)

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Related works:
Working Paper: Long-term care insurance and optimal taxation for altruistic children (2005)
Working Paper: Long-term care in insurance and optimal taxation for altruistic children (2003)
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