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Political sustainability and the design of social insurance

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  • CASAMATTA, Georges
  • CREMER, Helmuth
  • PESTIEAU, Pierre

Abstract

This paper examines how the issue of political support affects the design of social insurance. It distinguishes between redistributive character and size of social protection. Three main results emerge. First, it may be appropriate to adopt a system which is less redistributive than otherwise optimal, in order to ensure political support for an adequate level of coverage in the second (voting) stage. Second, supplementary private insurance may increase the welfare of the poor, even if it is effectively bought only by the rich. Third, the case for prohibiting (supplementary) private insurance may become stronger when the efficiency of private insurance markets increases.
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Suggested Citation

  • CASAMATTA, Georges & CREMER, Helmuth & PESTIEAU, Pierre, 2000. "Political sustainability and the design of social insurance," LIDAM Reprints CORE 1449, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    • Handle: RePEc:cor:louvrp:1449
    DOI: 10.1016/S0047-2727(99)00070-5
    Note: In : Journal of Public Economics, 75, 341-364, 2000
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    References listed on IDEAS

    as
    1. Helmuth Cremer & Pierre Pestieau, 1996. "Redistributive taxation and social insurance," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 3(3), pages 281-295, July.
    2. repec:bla:kyklos:v:52:y:1999:i:4:p:537-53 is not listed on IDEAS
    3. Diamond, Peter, 1992. "Organizing the Health Insurance Market," Econometrica, Econometric Society, vol. 60(6), pages 1233-1254, November.
    4. Olivia S. Mitchell, 1998. "Administrative Costs in Public and Private Retirement Systems," NBER Chapters, in: Privatizing Social Security, pages 403-456, National Bureau of Economic Research, Inc.
    5. Marcel Boyer & Jean-Jacques Laffont, 1999. "Toward a Political Theory of the Emergence of Environmental Incentive Regulation," RAND Journal of Economics, The RAND Corporation, vol. 30(1), pages 137-157, Spring.
    6. De Donder, Philippe & Hindriks, Jean, 1998. "The Political Economy of Targeting," Public Choice, Springer, vol. 95(1-2), pages 177-200, April.
    7. Epple, Dennis & Romano, Richard E, 1996. "Public Provision of Private Goods," Journal of Political Economy, University of Chicago Press, vol. 104(1), pages 57-84, February.
    8. Anderberg, Dan, 1999. "Determining the mix of public and private provision of insurance by majority rule," European Journal of Political Economy, Elsevier, vol. 15(3), pages 417-440, September.
    9. Laffont, Jean-Jacques, 1996. "Industrial policy and politics," International Journal of Industrial Organization, Elsevier, vol. 14(1), pages 1-27.
    10. Claudine Gouyette & Pierre Pestieau, 1999. "Efficiency of the Welfare State," Kyklos, Wiley Blackwell, vol. 52(4), pages 537-553, November.
    11. Jean-Charles Rochet, 1991. "Incentives, Redistribution and Social Insurance," The Geneva Risk and Insurance Review, Palgrave Macmillan;International Association for the Study of Insurance Economics (The Geneva Association), vol. 16(2), pages 143-165, December.
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