Imperfect 'tagging' in social insurance programs

Article Abstract:

The optimal social insurance system with a two-sided classification error is a dual-negative income tax system that pays premiums to tagged and untagged workers. Type II errors in the optimal social insurance system due to the presence of a greater heterogeneity of individual characteristics can be eliminated by the strategic manipulation of the reward structure. The consumption advantage of tagged individuals compared to untagged individuals of similar job status increases when the classification between tagged and untagged groups improves.

Direct Health and Medical Insurance Carriers, Surety insurance, Income Loss Insurance, Disability insurance, Negative income tax

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Population uncertainty, social insurance, and actuarial bias

Article Abstract:

A study was conducted to analyze a social insurance model and to determine the efficacy of modifications to this model. The model to be analyzed results in two actuarial biases because workers are classified into two types. A two-period overlapping-generations model is used in the analysis. The results of the analysis cancel the actuarial biases found in the first social insurance model and prove that benefits may be garnered between generations. The modifications enable the benefits to be Pareto-improving.

Labor market

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Social security reform for economic transition: the case of the Czech Republic

Article Abstract:

A study aimed at analyzing the design of social security reform for countries experiencing a shift to a market economy employed data from the Czech Republic. Replacing universal benefits by more generous but income-tested benefits helped the poor and decrease government expenditure. However, it damaged those that are slightly above the poverty line and increased the mixed marginal rates of tax and benefit withdrawal, notably the poor.

Czech Republic, Social policy

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