Uncertain altruism and non-linear long-term care policies

Canta, Chiara and Cremer, Helmuth (2018) Uncertain altruism and non-linear long-term care policies. TSE Working Paper, n. 18-924, Toulouse

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Official URL: http://tse-fr.eu/pub/32682


We study the design of public long-term care (LTC) insurance when the altruism of informal caregivers is uncertain. We consider non-linear policies where the LTC benefit depends on the level of informal care, which is assumed to be observable while children's altruism is not. The traditional topping up and opting out policies are special cases of ours. Both total and informal care should increase with the children's level of altruism. This obtains under full and asymmetric information. Social LTC, on the other hand, may be non-monotonic. Under asymmetric information, social LTC is lower than its full information level for the lowest level of altruism, while it is distorted upward for the higher level of altruism. This is explained by the need to provide incentives to highaltruism children. The implementing contract is always such that social care increases with formal care.

Item Type: Monograph (Working Paper)
Language: English
Date: May 2018
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
Divisions: TSE-R (Toulouse)
Institution: University Toulouse 1 Capitole
Site: UT1
Date Deposited: 28 May 2018 07:13
Last Modified: 28 May 2018 07:13
OAI ID: oai:tse-fr.eu:32682
URI: http://publications.ut-capitole.fr/id/eprint/26028

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