Abstract
Individuals face uncertainty about their labour income, due to chronic and temporary medical conditions or to unemployment spells. The individual burden of these risks can be eased by social insurance. Income taxation and government transfer programmes, such as disability and unemployment insurance, are the most common forms of social insurance. The challenge in the design of social insurance programmes is the impossibility of fully distinguishing between low income by choice and low income by necessity. This article reviews leading theories of optimal social insurance under private information and points to possible directions of future research.
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Acknowledgments
I wish to thank Claudia Olivetti, Nicola Pavoni and Bruce Preston for very helpful comments and discussion.
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Albanesi, S. (2018). Social Insurance. In: The New Palgrave Dictionary of Economics. Palgrave Macmillan, London. https://doi.org/10.1057/978-1-349-95189-5_2213
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DOI: https://doi.org/10.1057/978-1-349-95189-5_2213
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