Optimal social insurance with linear income taxation
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Optimal social insurance with linear income taxation. / Bovenberg, Lans; Sørensen, Peter Birch.
I: Scandinavian Journal of Economics, Bind 111, Nr. 2, 2009, s. 251-275.Publikation: Bidrag til tidsskrift › Tidsskriftartikel › Forskning › fagfællebedømt
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TY - JOUR
T1 - Optimal social insurance with linear income taxation
AU - Bovenberg, Lans
AU - Sørensen, Peter Birch
N1 - JEL classification: H21, H55
PY - 2009
Y1 - 2009
N2 - We study optimal social insurance aimed at insuring disability risk in the presence of linear income taxation. Optimal disability insurance benefits rise with previous earnings. Optimal insurance is incomplete even though disability risks are exogenous and verifiable so that moral hazard in disability insurance is absent. Imperfect insurance is optimal because it encourages workers to insure themselves against disability by working and saving more, thereby alleviating the distortionary impact of the redistributive income tax on labor supply and savings.
AB - We study optimal social insurance aimed at insuring disability risk in the presence of linear income taxation. Optimal disability insurance benefits rise with previous earnings. Optimal insurance is incomplete even though disability risks are exogenous and verifiable so that moral hazard in disability insurance is absent. Imperfect insurance is optimal because it encourages workers to insure themselves against disability by working and saving more, thereby alleviating the distortionary impact of the redistributive income tax on labor supply and savings.
KW - Faculty of Social Sciences
KW - disability insurance
KW - optimal taxation
KW - moral hazard
KW - redistribution
KW - labor supply
KW - skill groups
U2 - 10.1111/j.1467-9442.2009.01563.x
DO - 10.1111/j.1467-9442.2009.01563.x
M3 - Journal article
VL - 111
SP - 251
EP - 275
JO - Scandinavian Journal of Economics
JF - Scandinavian Journal of Economics
SN - 0347-0520
IS - 2
ER -
ID: 18106859