Maybe "honor thy father and thy mother": uncertainfamily aid and the design of social long term care insurance

Canta, Chiara, Cremer, Helmuth and Gahvari, Firouz (2016) Maybe "honor thy father and thy mother": uncertainfamily aid and the design of social long term care insurance. TSE Working Paper, n. 16-685, Toulouse

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Official URL: http://tse-fr.eu/pub/30580

Abstract

We study the role and design of private and public insurance programs when informal care is uncertain. Children's degree of altruism is represented by a parameter which is randomly distributed over some interval. The level of informal care on which dependent elderly can count is therefore random. Social insurance helps parents who receive a low level of care, but it comes at the cost of crowding out informal care. Crowding out occurs both at the intensive and the extensive margins. We consider two types of LTC policies. A topping up (TU ) scheme provides a transfer which is non exclusive and can be supplemented. An opting out (OO) scheme is exclusive and cannot be topped up. TU will involve crowding out both at the intensive and the extensive margins, whereas OO will crowd out solely at the extensive margin. However, OO is not necessarily the dominant policy as it may exacerbate crowding out at the extensive margin. Finally, we show that the distortions of both policies can be mitigated by using an appropriately designed mixed policy.

Item Type: Monograph (Working Paper)
Language: English
Date: July 2016
Place of Publication: Toulouse
Uncontrolled Keywords: Long term care, uncertain altruism, private insurance, public insurance, topping up, opting out
JEL codes: H2 - Taxation, Subsidies, and Revenue
H5 - National Government Expenditures and Related Policies
Subjects: B- ECONOMIE ET FINANCE
Divisions: TSE-R (Toulouse)
Institution: Université Toulouse Capitole
Site: UT1
Date Deposited: 25 Aug 2016 09:21
Last Modified: 20 Nov 2018 12:37
OAI ID: oai:tse-fr.eu:30580
URI: http://publications.ut-capitole.fr/id/eprint/22254

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