English, Article edition: Optimal Social Insurance with Linear Income Taxation Lans Bovenberg; Peter Birch Sørensen

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  • article
Language
  • English

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Title
  • Optimal Social Insurance with Linear Income Taxation
Author
  • Lans Bovenberg
  • Peter Birch Sørensen
Physical Description
  • article
Notes
  • 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. Copyright © The editors of the "Scandinavian Journal of Economics" 2009. .
  • RePEc:bla:scandj:v:111:y:2009:i:2:p:251-275
Language
  • English
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