@techreport{publications25679,
          volume = {17-839},
           month = {September},
          author = {Chiara Canta and Helmuth Cremer},
          series = {TSE Working Paper},
       booktitle = {TSE Working Paper},
            type = {Working Paper},
         address = {Toulouse},
           title = {Long-term care policy with nonlinear strategic bequests},
       publisher = {TSE Working Paper},
            year = {2017},
     institution = {Universit{\'e} Toulouse 1 Capitole},
        keywords = {Long-term care, informal care, strategic bequests, asymmetric information},
             url = {https://publications.ut-capitole.fr/id/eprint/25679/},
        abstract = {We study the design of long-term care (LTC) policy when children differ in their cost of providing informal care. Parents do not observe this cost, but they can commit to a "bequests rule" specifying a transfer conditional on the level of informal care. Care provided by high-cost children is distorted downwards in order to minimize the rent of low-cost ones. Social LTC insurance is designed to maximize a weighted sum of parents' and children's utility. The optimal uniform public LTC provision strikes a balance between insurance and children's utility. Under decreasing absolute risk aversion less than full insurance is provided to mitigate the distortion on informal care which reduces children's rents. A nonuniform policy conditioning LTC benefits on bequests provides full insurance even against the risk of having children with a high cost of providing care. Quite surprisingly the level of informal care induced by the optimal (uniform or nonuniform) policy always increases in the children's' welfare weight.}
}