Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/81430
Authors: 
Lindbeck, Assar
Persson, Mats
Year of Publication: 
2008
Series/Report no.: 
IFN Working Paper 763
Abstract: 
We develop a simple yet realistic model of income insurance, where the individual’s ability and willingness to work is treated as a continuous variable. In this framework, income insurance not only provides income smoothing, it also relieves the individual from particularly burdensome work. As a result, the individual adjusts his labor supply in a continuous fashion to the implicit tax wedge of the insurance system. Moral hazard, in the sense that an individual receives insurance benefits without actually being fully qualified, also becomes a matter of degree. Moreover, our continuous framework makes it easy to analyze both the role of administrative rejection of claims, and the role of social norms, for the utilization of insurance.
Subjects: 
Moral Hazard
Disability Insurance
Work Absence
Administrative Rejection
Asymmetric Information
Social Norms
JEL: 
G22
H53
I38
J21
Document Type: 
Working Paper

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