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From 2020 new at De Gruyter

German Economic Review

Ed. by Egger, Peter / Balleer, Almut / Crespo-Cuaresma, Jesus / Larch, Mario / Osikominu, Aderonke / Wamser, Georg

IMPACT FACTOR 2018: 0.638
5-year IMPACT FACTOR: 1.127

CiteScore 2018: 1.03

SCImago Journal Rank (SJR) 2018: 0.540
Source Normalized Impact per Paper (SNIP) 2018: 0.788

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Volume 20, Issue 4


Optimal Social Insurance and Health Inequality

Volker Grossmann
  • University of Fribourg, Fribourg, Switzerland
  • CESifo, Munich, Germany
  • Institute for the Study of Labor (IZA), Bonn, Germany
  • CReAM (University College London), London, United Kingdom of Great Britain and Northern Ireland
  • Other articles by this author:
  • De Gruyter OnlineGoogle Scholar
/ Holger Strulik
Published Online: 2019-12-07 | DOI: https://doi.org/10.1111/geer.12198


This paper integrates into public economics a biologically founded, stochastic process of individual aging. The novel approach enables us to quantitatively characterize the optimal joint design of health and retirement policy behind the veil of ignorance for today and in response to future medical progress. Calibrating our model to Germany, our analysis suggests that the current social insurance policy instruments are set close to the (constrained) socially optimal levels, given proportional contribution rates for health and pension finance, the equivalence principle in the pension system, and a common statutory retirement age. Future progress in medical technology calls for a potentially drastic increase in health spending and a higher retirement age without lowering the pension contribution rate. Interestingly, from an ex ante point of view, medical progress and higher health spending are in conflict with the goal to reduce health inequality.

Keywords: Aging; health expenditure; health inequality; social security system; retirement age

About the article

Published Online: 2019-12-07

Published in Print: 2019-12-01

Citation Information: German Economic Review, Volume 20, Issue 4, Pages e913–e948, ISSN (Online) 1468-0475, ISSN (Print) 1465-6485, DOI: https://doi.org/10.1111/geer.12198.

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