TY  - RPRT
CY  - Toulouse
ID  - publications25679
UR  - http://tse-fr.eu/pub/31970
A1  - Canta, Chiara
A1  - Cremer, Helmuth
Y1  - 2017/09//
N2  - 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.
PB  - TSE Working Paper
T3  - TSE Working Paper
KW  - Long-term care
KW  - informal care
KW  - strategic bequests
KW  - asymmetric information
M1  - working_paper
TI  - Long-term care policy with nonlinear strategic bequests
AV  - public
EP  - 69
ER  -