Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/181329
Authors: 
Canta, Chiara
Cremer, Helmuth
Year of Publication: 
2018
Series/Report no.: 
CESifo Working Paper 7129
Abstract: 
We study the design of public long-term care (LTC) insurance when the altruism of informal caregivers is uncertain. We consider non-linear policies where the LTC benefit depends on the level of informal care, which is assumed to be observable while children’s altruism is not. The traditional topping up and opting out policies are special cases of ours. Both total and informal care should increase with the children’s level of altruism. This obtains under full and asymmetric information. Social LTC, on the other hand, may be non-monotonic. Under asymmetric information, social LTC is lower than its full information level for the lowest level of altruism, while it is distorted upward for the higher level of altruism. This is explained by the need to provide incentives to high-altruism children. The implementing contract is always such that social care increases with formal care.
Subjects: 
long term care
uncertain altruism
private insurance
public insurance
topping up
opting out
JEL: 
H20
H50
Document Type: 
Working Paper
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