SOCIAL INSURANCE UNDER FRAUD AND REDISTRIBUTIVE TAXATION

Tsaur-Chin Michael Wu (), Chih-Ta Yen (), Che-Chiang Huang () and Jin-Li Hu ()
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Tsaur-Chin Michael Wu: Department of Public Finance, Feng Chia University, No. 100, Wehhua Rd, Xitun District, Taichung City, 407, ROC
Chih-Ta Yen: ��Department of Public Finance and Taxation, National Taichung University of Science and Technology, No. 129, Section 3, Sanmin Rd, North District, Taichung City, 404, ROC
Che-Chiang Huang: ��Department of Public Finance, China University of Technology, No. 56, Section 3, Xinglong Rd, Wonshan District, Taipei City, 116, ROC

The Singapore Economic Review (SER), 2023, vol. 68, issue 02, 467-483

Abstract: This paper examines the equity and efficiency effects of social insurance in the presence of insurance fraud and linear income taxes and shows the following findings. (i) Under the commonly accepted assumption of decreasing absolute risk aversion (DARA), the social insurance benefit may increase insurance fraud, whereas raising the marginal tax rate (lumpsum transfer) of the linear income tax also causes insurance fraud to increase (decrease). (ii) Equity and efficiency effects of social insurance are conflicting rather than complementary with each other.

Keywords: Social insurance; income taxes; insurance fraud (search for similar items in EconPapers)
JEL-codes: H21 H26 (search for similar items in EconPapers)
Date: 2023
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DOI: 10.1142/S0217590819500115

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