Bequests, Gifts, and Social Security

Laitner, John

doi:10.2307/2297582

Cited by 62 publications

(40 citation statements)

References 14 publications

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“…There was a heated debate about these issues at the end of the 1970's and early 1980's. See for example, Drazen (1978), Carmichael (1982), Buiter and Carmichael (1984), Burbidge (1984), Abel (1987) and Laitner (1988). Moreover, Cigno and Werding (2007) (p.121 and p.125) attribute inefficiencies pointed out in Conde-Ruiz, Giménez, and Pérez-Nievas (2010) and Wigniolle (2007, 2009) There are several reasons why assigning parents full property rights in altruistic models while assigning children full rights in non-altruistic models is so prevalent in the literature.…”

Section: Property Rights Vs Altruismmentioning

confidence: 99%

Property rights and efficiency in OLG models with endogenous fertility

Schoonbroodt

Tertilt

2014

Journal of Economic Theory

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Is there an economic rationale for pronatalist policies? We propose and analyze a particular market failure that leads to inefficiently low fertility in equilibrium. The friction is caused by the lack of ownership of children: if parents have no claim on their children's income, the private benefit from producing a child can be smaller than the social benefit. We analyze an overlapping-generations model with fertility choice and parental altruism. Ownership is modeled as a minimum constraint on transfers from parents to children. Using the efficiency concepts proposed in Golosov, Jones, and Tertilt (2007), we find that whenever the transfer floor is binding, fertility choices are inefficient. Second, we show that the usual conditions for efficiency are not sufficient in this context. Third, in contrast to settings with exogenous fertility, a PAYG social security system cannot be used to implement efficient allocations. To achieve an efficient outcome, government transfers need to be tied to fertility choice. JEL Classification: D6, E1, H55, J13

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Section: Property Rights Vs Altruismmentioning

confidence: 99%

Property rights and efficiency in OLG models with endogenous fertility

Schoonbroodt

Tertilt

2014

Journal of Economic Theory

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“…As in Abel (1986) or Laitner (1988), we assume that the function U (·, ·) is twice continuously differentiable and additive in its two arguments. Therefore, we will use the following functional form:…”

Section: The Modelmentioning

confidence: 99%

Estate taxes, consumption externalities, and altruism

Alonso-Carrera¹,

Caballé²,

Raurich³

2008

Journal of Public Economics

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We study how the introduction of consumption externalities affects the efficiency of the dynamic equilibrium in an economy displaying dynastic altruism. When the bequest motive is inoperative consumption externalities affect the intertemporal margin between young and old consumption and thus modify the intertemporal path of consumption and capital. The optimal tax policy that solves this intertemporal inefficiency consists of a tax on capital income and a pay-as-yougo social security system. The later solves the overaccumulation of capital due to the inoperativeness of the bequest motive and the former solves the inefficient allocation of consumption due to consumption externalities. When the bequest motive is operative consumption externalities only cause an intratemporal inefficiency that affects the allocation of consumption between the generations living in the same period but do not affect the optimality of the capital stock level. This suboptimal allocation of consumption implies in turn that the path of bequest is also suboptimal. The optimal tax policy in this case consists of an estate tax and a capital income tax. The estate tax corrects the intratemporal inefficiency but generates an intertemporal inefficiency which is corrected by means of an appropriate capital income tax. JEL classification codes: E21, E13, E62.

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“…Benabou (1996), Boldrin (1993), Fernandez and Rogerson (1996), Eckstein and Zilcha (1994), Glomm and Ravikumar (1992), Hanushek et al (2001) and many others study public education. The literature on social security includes Feldstein (1974Feldstein ( , 1982, Hubbard and Judd (1987), Karni and Zilcha (1989), and Laitner (1988and Laitner ( , 2001. In each of these papers, one specific government program is evaluated in isolation from any other government program.…”

Section: Introductionmentioning

confidence: 99%

Distributional Effects of Public Education in an Economy with Public Pensions*

Glomm

Kaganovich

2003

Int Economic Review

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We study how the allocation of government expenditures between two major outlays--education and pay-as-you-go social security--affects human capital distribution in an economy with heterogeneous agents. We consider an overlapping generations economy where the government maintains both programs, and allocates tax revenues to finance them. In our model, human capital is one of the factors of production. It is itself produced as a combined result of public inputs and private inputs. Parents' decisions to invest time and material resources in education of their children are motivated by altruism, heterogeneous in its strength across the population, which leads to heterogeneity of incomes. We investigate the effect of an increase in public funding for education on the human capital distribution. We show that in this framework, contrary to some earlier results, increased spending on public education may lead to higher inequality. Our results depend crucially on the interaction of education funding with the social security budget and on the elasticity of substitution in the learning technology. We are grateful to Richard Rogerson and two anonymous referees for insightful comments and suggestions, and to Xuejuan Su for research assistance. We also appreciate comments from

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Bequests, Gifts, and Social Security

Cited by 62 publications

References 14 publications

Property rights and efficiency in OLG models with endogenous fertility

Property rights and efficiency in OLG models with endogenous fertility

Estate taxes, consumption externalities, and altruism

Distributional Effects of Public Education in an Economy with Public Pensions*

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