Social insurance with risk-reducing investments
UNSPECIFIED. (2000) Social insurance with risk-reducing investments. ECONOMICA, 67 (265). pp. 37-56. ISSN 0013-0427Full text not available from this repository.
A two-sector model with sector-dependent disability risks is presented. Working in the low-risk sector requires skills that can be obtained by investments in education. Moral hazard precludes full insurance. The labour force allocation is responsive to the incentives created by a social insurance system. The rationale for intervention lies in the government's power to cross-subsidize between the sectors, and it is demonstrated how the responsiveness of the labour force allocation limits cross-subsidization. The second-best policy is time-inconsistent. The consistent equilibrium is explored and is argued to provide weak incentives to reduce risks.
|Item Type:||Journal Article|
|Subjects:||H Social Sciences > HC Economic History and Conditions|
|Journal or Publication Title:||ECONOMICA|
|Publisher:||BLACKWELL PUBL LTD|
|Number of Pages:||20|
|Page Range:||pp. 37-56|
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