Asymmetric information, strategic transfers and the design of long-term care policies

Chiara Canta () and Helmuth Cremer
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Chiara Canta: TBS - Toulouse Business School

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Abstract: We study the optimal design of social long-term care (LTC) insurance when the utility of informal caregivers is taken into account. Informal care is exchange-based. Children's cost of providing care is continuously distributed over some interval and is not observable. Parents choose a rule specifying transfers conditional on the level of informal care. We study first uniform provision of LTC and then a nonlinear policy depending on family transfers. In both cases, informal care increases with the children's welfare weight. Our theoretical analysis is completed by calibrated numerical solutions. Uniform public care should represent up to 40% of total care but its share decreases to about 30% as the weight of children increases. In the nonlinear case, public care increases with the children's cost of providing care at a faster rate when children's weight in social welfare is higher. It represents 100% of total care for families with high-cost children.

Keywords: Long-term care; Informal care; Strategic bequests; Asymmetric information. (search for similar items in EconPapers)
Date: 2023-01
New Economics Papers: this item is included in nep-age, nep-hea and nep-inv
Note: View the original document on HAL open archive server: https://hal.science/hal-04076813v1
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Published in Oxford Economic Papers, 2023, 75 (1), pp.117-141. ⟨10.1093/oep/gpac010⟩

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Related works:
Journal Article: Asymmetric information, strategic transfers, and the design of long-term care policies (2023)
Working Paper: Asymmetric Information, Strategic Transfers, and the Design of Long-Term Care Policies (2020)
Working Paper: Asymmetric information, strategic transfers, and the design of long-term care policies (2020)
Working Paper: Asymmetric information, strategic transfers, and the design of long-term care policies (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-04076813

DOI: 10.1093/oep/gpac010

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