Social insurance and redistribution

Boadway, Robin;Leite-Monteiro, Manuel;Marchand, Maurice;Pestieau, Pierre
(2001)

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Authors
  • Boadway, Robin
    Author
  • Leite-Monteiro, Manuel
    Author
  • Marchand, Maurice
    Author
  • Pestieau, PierreUCLouvain
    Author
Abstract
This paper studies optimal linear income taxation and redistributive social insurance when the former has the traditional labor distortion and the latter generates both ex ante and ex post moral hazard. Private insurance is available and individuals differ in labor productivity and in loss probability. We show that government intervention in insurance markets is welfare-improving, and social insurance is generally desirable particularly when there is a negative correlation between labor productivity and loss probability.
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Boadway, R., Leite-Monteiro, M., Marchand, M., & Pestieau, P. (2001). Social insurance and redistribution (CORE Discussion Papers 2001/41). https://hdl.handle.net/2078.5/36087