120 research outputs found
Public health insurance and entry into self-employment
We estimate the impact of a differential treatment of paid employees versus
self-employed workers in a public health insurance system on the entry rate
into entrepreneurship. In Germany, the public health insurance system is
mandatory for most paid employees, but not for the selfemployed, who usually
buy private health insurance. Private health insurance contributions are
relatively low for the young and healthy, and until 2013 also for males, but
less attractive at the other ends of these dimensions and if membership in the
public health insurance allows other family members to be covered by
contribution-free family insurance. Therefore, the health insurance system can
create incentives or disincentives to starting up a business depending on the
family’s situation and health. We estimate a discrete time hazard rate model
of entrepreneurial entry based on representative household panel data for
Germany, which include personal health information, and we account for non-
random sample selection. We estimate that an increase in the health insurance
cost differential between self-employed workers and paid employees by 100 euro
per month decreases the annual probability of entry into selfemployment by
0.38 percentage points, i.e. about a third of the average annual entry rate.
The results show that the phenomenon of entrepreneurship lock, which an
emerging literature describes for the system of employer provided health
insurance in the USA, can also occur in a public health insurance system.
Therefore, entrepreneurial activity should be taken into account when
discussing potential health care reforms, not only in the USA and in Germany
Optimal taxation under different concepts of justness
A common assumption in the optimal taxation literature is that the social planner maximizes a welfarist social welfare function with weights decreasing with income. However, high transfer withdrawal rates in many countries imply very low weights for the working poor in practice. We reconcile this puzzle by generalizing the optimal taxation framework by Saez (2002) to allow for alternatives to welfarism. We calculate weights of a social planners function as implied by the German tax and transfer system based on the concepts of welfarism, minimum absolute and relative sacrifice, as well as subjective justness. For the latter we use a novel question from the German Socio-Economic Panel. We find that the minimum absolute sacrifice principle is in line with social weights that decline with net income. Absolute subjective justness is roughly in line with decreasing social weights, which is reflected by preferences of men, West Germans, and supporters of the grand coalition parties
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