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AbstractWe study the design of public long‐term care (LTC) insurance when the altruism of informal caregivers is uncertain. We consider non‐linear policies where the LTC transfer depends on the level of informal care, which is assumed to be observable, while children's altruism is not. Our policy encompasses two policies traditionally considered in the literature: topping up policies consisting of a transfer independent of informal care, and opting out policies entailing a positive transfer only if children fail to provide care. We show that both total and informal care should increase with the children's level of altruism. This is obtained under full and asymmetric information. Public LTC transfers, on the other hand, may be non‐monotonic. Under asymmetric information, public LTC transfers are lower than their full information level for the parents whose children are the least altruistic, while it is distorted upward for the highest level of altruism. This is explained by the need to provide incentives to highly altruistic children. In contrast to both topping up and opting out policies, the implementing contract is always such that social care increases with informal care.

Abstract
We study spousal peer effects on smoking and their implication for the health of children. Smoking decisions are modeled as equilibrium strategies of an incomplete information game within the couple. Using French data, we identify two peer effects: a smoking enhancing effect of smoking partners and a smoking deterring effect of non-smoking partners. An implication of these findings is that the smoking behavior may differ qualitatively in couples where both partners smoke and where only one partner smokes. This interpretation is supported by our finding that, controlling for total tobacco consumption of parents, the respiratory health of children is negatively affected only if both parents smoke.

Abstract: Long-term care (LTC) is mainly provided by the family and subsidiarily by the market and the government. To understand the role of these three institutions, it is important to understand the motives and the working of family solidarity. In this paper, we focus on the case when LTC is provided by children to their dependent parents out of some norm that has been inculcated to them during their childhood by some exemplary behavior of their parents towards their own parents. In the first part, we look at the interaction between the family and the market in providing for LTC. The key parameters are the probability of dependence, the probability of having a norm-abiding child and the loading factor. In the second part, we introduce the government which has a double mission: correct for a prevailing externality and redistribute resources across heterogeneous households.

Long term care (LTC) is mainly provided by the family and subsidiarily by the market and the government. To understand the role of these three institutions it is important to understand the motives and the working of family solidarity. In this paper we focus on the case when LTC is provided by children to their dependent parents out of some norm that has been inculcated to them during their childhood by some exemplary behavior of their parents towards their own parents. In the first part, we look at the interaction between the family and the market in providing for LTC. The key parameters are the probability of dependence, the probability of having a norm-abiding child and the loading factor. In the second part, we introduce the government which has a double mission: correct for a prevailing externality and redistribute resources across heterogeneous households.

Long term care (LTC) is mainly provided by the family and subsidiarily by the market and the government. To understand the role of these three institutions it is important to understand the motives and the working of family solidarity. In this paper we focus on the case when LTC is provided by children to their dependent parents out of some norm that has been inculcated to them during their childhood by some exemplary behavior of their parents towards their own parents. In the first part, we look at the interaction between the family and the market in providing for LTC. The key parameters are the probability of dependence, the probability of having a norm-abiding child and the loading factor. In the second part, we introduce the government which has a double mission: correct for a prevailing externality and redistribute resources across heterogeneous households.