Optimal Taxation and Social Insurance with Endogenous Private Insurance

By Raj Chetty, Emmanuel Saez. 2010

136 citations recorded by the source corpus.

This paper characterizes the welfare gains from redistributive taxation and social insurance in an environment where the private sector provides partial insurance. We analyze stylized models in which adverse selection, pre-existing information, or imperfect optimization in private insurance markets create a role for government intervention. We derive simple formulas that map reduced-form empirical estimates into quantitative predictions for optimal tax and social insurance policy. Applications to unemployment and health insurance show that taking private market insurance into account matters significantly for optimal benefit levels given existing empirical estimates of the key parameters.

Subfields: Accounting, Economics and Econometrics, Gender Studies

View Paper: https://www.semanticscholar.org/paper/2d63488f9974edeb1a21060b5afdd1ba4fbd32b7

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Citations in the corpus

The Pros and Cons of Sick Pay Schemes: Testing for Contagious Presenteeism and Noncontagious Absenteeism Behavior (2016, background): “2015; Marinescu 2017), endogenous private insurance (Chetty and Saez 2010), or unhealthy consumption goods (O’Donoghue and Rabin 2006).”
Social Insurance: Connecting Theory to Data (2012, background): “Indeed, the optimal social insurance problem is formally identical to an optimal Ramsey taxation problem (Chetty and Saez 2010).”