Incentives, redistribution and social insurance |
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Authors: | Jean-Charles Rochet |
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Abstract: | We extend the familiar income taxation model à la Mirrlees, so as to include income uncertainty, due for instance to a risk
of illness. Following a line of research initiated by Blomqvist and Horn 1984] we prove that the existence of a Social Health
Insurance system may be justified even when the insurance market is efficient. Moreover, if there is a negative statistical
dependence between probability of illness and labor productivity, then the optimum of a Utilitarianist Social Welfare function
implies that Social Insurance provides a complete coverage for every household. |
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Keywords: | Social Insurance Redistribution Incentives |
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