Optimal social insurance and health inequality
Volker Grossmann () and
Holger Strulik ()
No 302, Center for European, Governance and Economic Development Research Discussion Papers from University of Goettingen, Department of Economics
This paper integrates into public economics a biologically founded, stochastic process of individual ageing. The novel approach enables us to quantitatively characterize the optimal joint design of health and retirement policy behind the veil of ignorance for today and in response to future medical progress. Calibrating our model to Germany, we find that future progress in medical technology calls for a potentially drastic increase in health spending that typically should be accompanied by a lower pension savings rate and a higher retirement age. Interestingly, medical progress and higher health spending are in conflict with the goal to reduce health inequality.
Keywords: ageing; health expenditure; health inequality; social security system; retirement age (search for similar items in EconPapers)
JEL-codes: H50 I10 C60 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-age, nep-hea, nep-ias and nep-pbe
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Working Paper: Optimal Social Insurance and Health Inequality (2015)
Working Paper: Optimal social insurance and health inequality (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:cegedp:302
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