Long-term Care Insurance and Optimal Taxation for Altruistic Children - 10.1628/0015221053722514 - Mohr Siebeck
Economics

Alain Jousten, Barbara Lipszyc, Maurice Marchand, Pierre Pestieau

Long-term Care Insurance and Optimal Taxation for Altruistic Children

Section: Articles
FinanzArchiv (FA)

Volume 61 () / Issue 1, pp. 1-18 (18)

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We model long-term care insurance in an optimal taxation framework. Every adult decides upon the amount and type of care he purchases for his dependent parent. We consider two alternatives: nursing-home care provided by the government, and home care paid by the child with some lump-sum subsidy by the government. The only source of information asymmetry is the government's inability to observe the degree of altruism of the adult child for his/her parent. Further tax collection entails some social costs. In such a second-best setting, we show that the quality of institutional care has to be kept relatively low and that compared to altruistic children, nonaltruistic ones enjoy a high level of consumption.
Authors/Editors

Alain Jousten No current data available.

Barbara Lipszyc No current data available.

Maurice Marchand No current data available.

Pierre Pestieau No current data available.