Wives, husbands and wheelchairs: Optimal tax policy under gender-specific health

Marie-Louise Leroux and Grégory Ponthière ()
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Grégory Ponthière: PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École nationale des ponts et chaussées - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, PJSE - Paris-Jourdan Sciences Economiques - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École nationale des ponts et chaussées - CNRS - Centre National de la Recherche Scientifique

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Abstract: We study the optimal taxation problem in an economy composed of two-person households (men and women), where agents influence their own old-age dependency prospects through health spending. It is shown that the utilitarian social optimum can be decentralized by means of lump sum transfers from men to women, because women exhibit a higher disability-free life expectancy than men for a given level of health spending. Once self-oriented concerns for coexistence are introduced, the decentralization of the first-best requires also gender-specific subsidies on health spending aimed at internalizing the effect of each agent's health on the spouse's welfare. In the presence of singles in the population, the optimal policy requires also a differentiated subsidization of health spending for singles and couples. Finally, under imperfect observability of couples, the incentive compatibility constraints reinforce the need for subsidization of health spendings.

Keywords: Long term care; optimal taxation; preventive health spending; gender differentials; old age dependency; dépendance; taxation optimale; dépenses de santé préventives; différentiels hommes femmes; autonomie des personnes âgées (search for similar items in EconPapers)
Date: 2009-11
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00575059v1
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Working Paper: Wives, husbands and wheelchairs: Optimal tax policy under gender-specific health (2009)
Working Paper: Wives, husbands and wheelchairs: Optimal tax policy under gender-specific health (2009)
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