Where Should the Elderly Live and Who Should Pay for Their Care?

26 Pages Posted: 4 Jun 2010

See all articles by Thomas Aronsson

Thomas Aronsson

University of Umea - Department of Economics; Uppsala University

Soren Blomquist

Uppsala University - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute)

Luca Micheletto

University of Milan

Date Written: 2008-02

Abstract

We consider a model with a population consisting of earners and retired persons; elderly care is publicly provided. There is one big city, where congestion effects and agglomeration forces are at work, and a number of small villages. We show how the externalities related to population mobility lead to an inefficient spatial distribution of earners and retirees, and we characterize the second-best solution. Decentralization of this solution in a fiscal federalism structure requires the use of taxes and subsidies proportional to the number of earners and retired persons living in the city and the villages.

Suggested Citation

Aronsson, Thomas and Blomquist, Soren and Micheletto, Luca, Where Should the Elderly Live and Who Should Pay for Their Care? (2008-02). Scandinavian Journal of Economics, Vol. 112, Issue 2, pp. 289-314, June 2010, Available at SSRN: https://ssrn.com/abstract=1616922 or http://dx.doi.org/10.1111/j.1467-9442.2010.01601.x

Thomas Aronsson (Contact Author)

University of Umea - Department of Economics ( email )

Umeå University
Umea, SE - 90187
Sweden

Uppsala University

Box 513
Uppsala, 751 20
Sweden

Soren Blomquist

Uppsala University - Department of Economics ( email )

Box 513
SE-75120 Uppsala
Sweden
+46 18 471 1102 (Phone)
+46 18 471 1478 (Fax)

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

HOME PAGE: http://www.CESifo.de

Luca Micheletto

University of Milan ( email )

Via Festa del Perdono, 7
Milan, 20122
Italy

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