Social insurance and redistribution with moral hazard and adverse selection

Robin Boadway; Manuel Leite-Monteiro; Maurice Marchand; Pierre Pestieau

Social insurance and redistribution with moral hazard and adverse selection

Robin Boadway ¹ Manuel Leite-Monteiro ² Maurice Marchand ³ Pierre Pestieau ^{4, 5}

1 Queen's University [Kingston]

2 Universidade Católica Portuguesa

3 UCL - Université Catholique de Louvain

4 PJSE - Paris-Jourdan Sciences Economiques

5 Université de Liège

Abstract : Rochet (1991) showed that with distortionary income taxes, social insurance is a desirable redistributive device when risk and ability are negatively correlated. This finding is re-examined when ex post moral hazard and adverse selection are included, and under different informational assumptions. Individuals can take actions influencing the size of the loss in the event of accident (or ill health). Social insurance can be supplemented by private insurance, but private insurance markets are affected by both adverse selection and moral hazard. We study how equity and efficiency considerations should be traded off in choosing the optimal coverage of social insurance when those features are introduced. The case for social insurance is strongest when the government is well informed about household productivity.

Document type :

Journal articles

Domain :

Humanities and Social Sciences / Economics and Finance

Complete list of metadatas

https://hal-pjse.archives-ouvertes.fr/halshs-00754141
Contributor : Caroline Bauer <>
Submitted on : Tuesday, November 20, 2012 - 8:45:06 AM
Last modification on : Tuesday, April 24, 2018 - 5:20:09 PM

Social insurance and redistribution with moral hazard and adverse selection

Links full text

Identifiers

Collections

Citation

Export

Metrics

345

Contact

Social insurance and redistribution with moral hazard and adverse selection

Links full text

Identifiers

Collections

Citation

Export

Share

Metrics

345

Contact