The Geneva Papers on Risk and Insurance Theory

, Volume 16, Issue 2, pp 143–165 | Cite as

Incentives, Redistribution and Social Insurance

  • Jean-Charles Rochet
Original Paper

Abstract

We extend the familiar income taxation model à la Mirrlees, so as to include income uncertainty, due for instance to a risk of illness. Following a line of research initiated by Blomqvist and Horn [1984] we prove that the existence of a Social Health Insurance system may be justified even when the insurance market is efficient. Moreover, if there is a negative statistical dependence between probability of illness and labor productivity, then the optimum of a Utilitarianist Social Welfare function implies that Social Insurance provides a complete coverage for every household.

Keywords

Social Insurance Redistribution Incentives 

Copyright information

© The Geneva Association 1991

Authors and Affiliations

  • Jean-Charles Rochet
    • 1
  1. 1.GREMAQ, Université de ToulouseToulouse cedexFrance

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