Social insurance and redistribution with moral hazard and adverse selection

Robin Boadway, Manuel Leite-Monteiro, Maurice Marchand and Pierre Pestieau

No 2004083, LIDAM Discussion Papers CORE from Université catholique de Louvain, Center for Operations Research and Econometrics (CORE)

Abstract: Rochet (1989) showed that with distortionary income taxes, social insurance is a desirable redistributive device when risk and ability are negatively correlated. This finding is reexamined when ex post moral hazard and adverse selection are included, and under different informational assumptions. Individuals can take actions influencing the size of the loss in the event of accident (or ill health). Social insurance can be supplemented by private insurance, but private insurance markets are affected by both adverse selection and moral hazard. We study how equity and efficiency considerations should be traded off in choosing the optimal coverage of social insurance when those features are introduced. The case for social insurance is strongest when the government is well informed about household productivity.

Keywords: social insurance; redistribution; market failures (search for similar items in EconPapers)
JEL-codes: H23 H51 (search for similar items in EconPapers)
Date: 2004-12
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

Downloads: (external link)
https://sites.uclouvain.be/core/publications/coredp/coredp2004.html (text/html)

Related works:
Journal Article: Social Insurance and Redistribution with Moral Hazard and Adverse Selection* (2006)
Working Paper: Social insurance and redistribution with moral hazard and adverse selection (2006)
Working Paper: Social Insurance and Redistribution with Moral Hazard and Adverse Selection (2004)
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:cor:louvco:2004083

Access Statistics for this paper

More papers in LIDAM Discussion Papers CORE from Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) Voie du Roman Pays 34, 1348 Louvain-la-Neuve (Belgium). Contact information at EDIRC.
Bibliographic data for series maintained by Alain GILLIS ().