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Gerontocracy Revisited: Unilateral Transfer to the Young May Benefit the Middle-aged

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  • Poutvaara, Panu

Abstract

According to conventional wisdom, intergenerational transfers can survive, in the absence of altruism, only if the old are net recipients. I prove that this need not hold in an overlapping generations model with a fixed factor. For example, the middle-aged owning land may gain by providing public education even when they cannot tax the young and when the young face no credit market constraints. This requires that labor is not mobile. Furthermore, establishing public education may benefit only the generation which pays for education twice, first for itself and then for the next generation.

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  • Poutvaara, Panu, 2002. "Gerontocracy Revisited: Unilateral Transfer to the Young May Benefit the Middle-aged," Discussion Papers 275, VATT Institute for Economic Research.
    • Handle: RePEc:fer:dpaper:275
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    Cited by:

    1. Marko Köthenbürger & Panu Poutvaara, 2006. "Social Security Reform and Investment in Education: Is There Scope for a Pareto Improvement?," Economica, London School of Economics and Political Science, vol. 73(290), pages 299-319, May.
    2. Gersbach, Hans & Siemers, Lars-H. R., 2010. "Land Reforms And Economic Development," Macroeconomic Dynamics, Cambridge University Press, vol. 14(4), pages 527-547, September.
    3. Iñigo Iturbe-Ormaetxe & Guadalupe Valera, 2012. "Social security reform and the support for public education," Journal of Population Economics, Springer;European Society for Population Economics, vol. 25(2), pages 609-634, January.
    4. Torben Andersen & Joydeep Bhattacharya, 2020. "Intergenerational Debt Dynamics Without Tears," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 35, pages 192-219, January.
    5. Marko Koethenbuerger & Panu Poutvaara, 2009. "Rent taxation and its intertemporal welfare effects in a small open economy," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 16(5), pages 697-709, October.
    6. Gersbach, Hans & Siemers, Lars, 2005. "Can Democracy Educate a Society?," IZA Discussion Papers 1693, Institute of Labor Economics (IZA).
    7. Bishnu, Monisankar & Garg, Shresth & Garg, Tishara & Ray, Tridip, 2021. "Optimal intergenerational transfers: Public education and pensions," Journal of Public Economics, Elsevier, vol. 198(C).
    8. Baskaran, Thushyanthan & Hessami, Zohal & Schirner, Sebastian, 2024. "Young versus Old Politicians in Local Politics," IZA Discussion Papers 17009, Institute of Labor Economics (IZA).
    9. Andersen, Torben M. & Bhattacharya, Joydeep & Liu, Pan, 2020. "Resolving intergenerational conflict over the environment under the Pareto criterion," Journal of Environmental Economics and Management, Elsevier, vol. 100(C).
    10. Andersen, Torben M. & Bhattacharya, Joydeep & Liu, Pan, 2018. "A way to resolve intergenerational conflict over the environment under the Pareto criterion using green bonds," ISU General Staff Papers 201808240700001070, Iowa State University, Department of Economics.
    11. Torben M. Andersen & Joydeep Bhattacharya, 2013. "The Intergenerational Welfare State," CESifo Working Paper Series 4359, CESifo.

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    More about this item

    Keywords

    Intergenerational goods; Education; Land; Gerontocracy; Economic growth; Taloudellinen kasvu; Public services; Julkiset palvelut; Taxation and Social Transfers; Julkisen talouden rahoitus ja tulonsiirrot; C000 - Mathematical and Quantitative Methods: General; H520 - National Government Expenditures and Education; I200 - Education: General; J120 - Marriage; Marital Dissolution; Family Structure; J620 - Job; Occupational; and Intergenerational Mobility; Promotion; O150 - Economic Development: Human Resources; Human Development; Income Distribution; Migration (nutrition; health; education; fertility; household structure and formation; labor markets);
    All these keywords.

    JEL classification:

    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • J12 - Labor and Demographic Economics - - Demographic Economics - - - Marriage; Marital Dissolution; Family Structure
    • I20 - Health, Education, and Welfare - - Education - - - General
    • C00 - Mathematical and Quantitative Methods - - General - - - General
    • J62 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Job, Occupational and Intergenerational Mobility; Promotion
    • H52 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Education

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