Long-term care in insurance and optimal taxation for altruistic children

Alain Jousten, Barbara Lipszyc, Maurice Marchand and Pierre Pestieau

No 2003063, LIDAM Discussion Papers CORE from Université catholique de Louvain, Center for Operations Research and Econometrics (CORE)

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 stems from the governments 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, non-altruistic ones enjoy a high level of consumption.

Date: 2003-09
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Citations: View citations in EconPapers (9)

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Related works:
Journal Article: Long-term Care Insurance and Optimal Taxation for Altruistic Children (2005)
Working Paper: Long-term care insurance and optimal taxation for altruistic children (2005)
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Persistent link: https://EconPapers.repec.org/RePEc:cor:louvco:2003063

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