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The political economy of intergenerational cooperation

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  • Cigno, Alessandro

Abstract

This chapter examines the scope for mutually beneficial intergenerational cooperation, and looks at various attempts to theoretically explain the emergence of norms and institutions that facilitate this cooperation. The contributions reviewed come from branches of economics as far apart as household economics and political economy, and encompass both the normative and the positive branch of public economics. Section 2 establishes a normative framework. Sections 3 and 4 examine the properties of the laissez-faire solution in a pure market economy, and in one where reproductive decisions and intra-family transfers are constrained by self-enforcing family constitutions. Section 5 introduces the state, and shows that first and second-best policy include a pension and a child benefit scheme. Section 6 rexamines the same issues in the presence of educational investment. Section 7 introduces uncertainty and asymmetrical information, and shows that second-best public transfers to families are conditional on number of children, and on some measure of the children's success in adult life. Section 8 looks at the possibility that intergenerational redistribution might be supported by some kind of political equilibrium. One type of model looks at the possibility of a self-enforcing constitution governing intergenerational transfers at societal rather than family level. Another type of model looks for voting equilibria in direct, and in representative democracies.

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This chapter was published in:

  • S. Kolm & Jean Mercier Ythier (ed.), 2006. "Handbook of the Economics of Giving, Altruism and Reciprocity," Handbook on the Economics of Giving, Reciprocity and Altruism, Elsevier, edition 1, volume 2, number 2, 00.
    This item is provided by Elsevier in its series Handbook on the Economics of Giving, Reciprocity and Altruism with number 2-25.

    Handle: RePEc:eee:givchp:2-25

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    1. Baland, J.M. & Robinson, J.A., 1998. "Rotten Parents," Papers 207, Notre-Dame de la Paix, Sciences Economiques et Sociales.
    2. Verbon, Harrie, 1993. "Public Pensions: The Role of Public Choice and Expectations," Journal of Population Economics, Springer, vol. 6(2), pages 123-35, May.
    3. Pecchenino, R.A., 1994. "Social Security, Social Welfare and the Aging Population," Papers 9403, Michigan State - Econometrics and Economic Theory.
    4. Docquier, Frederic & Michel, Philippe, 1999. " Education Subsidies, Social Security and Growth: The Implications of a Demographic Shock," Scandinavian Journal of Economics, Wiley Blackwell, vol. 101(3), pages 425-40, September.
    5. van Groezen, Bas & Leers, Theo & Meijdam, Lex, 2003. "Social security and endogenous fertility: pensions and child allowances as siamese twins," Journal of Public Economics, Elsevier, vol. 87(2), pages 233-251, February.
    6. Alessandro Balestrino & Alessandro Cigno & Anna Pettini, 2002. "Endogenous Fertility and the Design of Family Taxation," International Tax and Public Finance, Springer, vol. 9(2), pages 175-193, March.
    7. Hansson, Ingemar & Stuart, Charles, 1989. "Social Security as Trade among Living Generations," American Economic Review, American Economic Association, vol. 79(5), pages 1182-95, December.
    8. Caillaud, B. & Cohen, D., 2000. "Inter-generational transfers and common values in a society," European Economic Review, Elsevier, vol. 44(4-6), pages 1091-1103, May.
    9. Martin Kolmar, 1997. "Intergenerational redistribution in a small open economy with endogenous fertility," Journal of Population Economics, Springer, vol. 10(3), pages 335-356.
    10. Eckstein, Zvi & Wolpin, Kenneth I., 1985. "Endogenous fertility and optimal population size," Journal of Public Economics, Elsevier, vol. 27(1), pages 93-106, June.
    11. Esteban, J.M. & sakovics, J., 1992. "Intertemp[oral Transfer Institutions," UFAE and IAE Working Papers 172.92, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
    12. Farrell, Joseph & Maskin, Eric, 1987. "Renegotiation in Repeated Games," Department of Economics, Working Paper Series qt9wv3h5jb, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
    13. Guido Tabellini, 1989. "The Politics of Intergenerational Redistribution," NBER Working Papers 3058, National Bureau of Economic Research, Inc.
    14. Andreas Wagener, 2003. "Pensions as a portfolio problem: fixed contribution rates vs. fixed replacement rates reconsidered," Journal of Population Economics, Springer, vol. 16(1), pages 111-134, 02.
    15. Veall, Michael R., 1986. "Public pensions as optimal social contracts," Journal of Public Economics, Elsevier, vol. 31(2), pages 237-251, November.
    16. Breyer, Friedrich, 1994. "The political economy of intergenerational redistribution," European Journal of Political Economy, Elsevier, vol. 10(1), pages 61-84, May.
    17. Robert Kollmann, 1997. "Endogenous fertility in a model with non-dynastic parental altruism," Journal of Population Economics, Springer, vol. 10(1), pages 87-95.
    18. Stiglitz, Joseph E & Weiss, Andrew, 1981. "Credit Rationing in Markets with Imperfect Information," American Economic Review, American Economic Association, vol. 71(3), pages 393-410, June.
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    Cited by:
    1. Ana Fernandes, 2011. "Altruism, labor supply and redistributive neutrality," Journal of Population Economics, Springer, vol. 24(4), pages 1443-1469, October.
    2. repec:ese:iserwp:2006-13 is not listed on IDEAS
    3. J. Ignacio Conde-Ruiz & Eduardo L. Giménez & Mikel Pérez-Nievas, 2010. "Millian Efficiency with Endogenous Fertility," Review of Economic Studies, Oxford University Press, vol. 77(1), pages 154-187.
    4. Javier Birchenall & Rodrigo Reis Soares, 2007. "Altruism, Fertility, and the Value of Children: Health Policy Evaluation and Intergenerational Welfare," Textos para discussão 537, Department of Economics PUC-Rio (Brazil).
    5. Michele Boldrin & Ana Montes, 2009. "Assessing the efficiency of public education and pensions," Journal of Population Economics, Springer, vol. 22(2), pages 285-309, April.
    6. Alessandro Cigno & Annalisa Luporini, 2006. "Optimal Policy Towards Families with Different Amounts of Social Capital, in the Presence of Asymmetric Information and Stochastic Fertility," CESifo Working Paper Series 1664, CESifo Group Munich.
    7. Wolff, François-Charles, 2006. "Les transferts ascendants au Bangladesh, une décision familiale?," L'Actualité Economique, Société Canadienne de Science Economique, vol. 82(1), pages 271-316, mars-juin.
    8. Gil Epstein, 2006. "The political economy of population economics," Journal of Population Economics, Springer, vol. 19(2), pages 255-257, June.

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