Endogenous altruism and long term care policies in a Mirrleesian setting

Helmuth Cremer () and Firouz Gahvari
Additional contact information
Helmuth Cremer: TSE-R - Toulouse School of Economics - UT Capitole - Université Toulouse Capitole - UT - Université de Toulouse - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement
Firouz Gahvari: UIUC - University of Illinois at Urbana-Champaign [Urbana] - University of Illinois System

Working Papers from HAL

Abstract: This study contributes to the long-term care policy literature by exploring how, in an uncertain environment, redistributive tax policies and long-term care program design interact with informal care incentives, shaping long-term caregiving outcomes. The analysis is done within an overlapping-generations model in the steady state under full and asymetric information. Altruistic children provide informal care to their elderly parents if dependent. Not all children are altruistic. Children's level of altruism is shaped by the time and attention they received in childhood. Key findings, under asymetric information, include: (i) Allocations are distorted for redistributive purposes, except for savings, (ii) marginal income tax rates are positive, aligning with standard nonlinear income taxation models, and (iii) a consequence of government's redistributive policies is to encourage time spent with children thus incresing family caregiving. These three findings apply to both "opting out" and "topping up" schemes. (iv) Savings must be subsidized in an opting out system due to fiscal externalities; (v) if public assistance carries a stigma, it may have to be distorted upward; the opting-out policy welfare dominates the topping-up policy. Finally, if long term care provision carries no stigma, opting out is more cost-effective than topping up in both first- and second-best.

Keywords: Long term care; Uncertain altruism; Opting out; Topping up; Public insurance (search for similar items in EconPapers)
Date: 2025-03-14
Note: View the original document on HAL open archive server: https://hal.science/hal-04991040v1
References: Add references at CitEc
Citations:

Downloads: (external link)
https://hal.science/hal-04991040v1/document (application/pdf)

Related works:
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:hal:wpaper:hal-04991040

Access Statistics for this paper

More papers in Working Papers from HAL
Bibliographic data for series maintained by CCSD ().