Fair Long-Term Care Insurance
The study of optimal long-term care (LTC) social insurance is generally carried out under the utilitarian social criterion, which penalizes individuals who have a lower capacity to convert resources into well-being, such as dependent elderly individuals or prematurely dead individuals. This paper revisits the design of optimal LTC insurance while adopting the ex post egalitarian social criterion, which gives priority to the worst-o§ in realized terms (i.e. once the state of nature has been revealed). Using a lifecycle model with risk about the duration of life and risk about old-age dependence, it is shown that the optimal LTC social insurance is quite sensitive to the postulated social criterion. The optimal second-best social insurance under the ex post egalitarian criterion involves, in comparison to utilitarianism, higher LTC benefits, lower pension benefits, a higher tax rate on savings, as well as a lower tax rate on labor earnings.
Year of publication: |
2019
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Authors: | Leroux, Marie-Louise ; Pestieau, Pierre ; Ponthiere, Gregory |
Publisher: |
Montréal : Université du Québec à Montréal, École des sciences de la gestion (ESG UQAM), Département des sciences économiques |
Saved in:
freely available
Series: | Document de travail ; 2019-09 |
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Type of publication: | Book / Working Paper |
Type of publication (narrower categories): | Working Paper |
Language: | English |
Other identifiers: | hdl:10419/234794 [Handle] |
Source: |
Persistent link: https://www.econbiz.de/10012542497
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