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The Political Economy of Intergenerational Cooperation

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  • Alessandro Cigno

Abstract

The paper 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. After establishing a normative framework, we examine the properties of the laissez-faire solution in a pure market economy, and in one where reproductive decisions and intergenerational transfers are governed by self-enforcing family constitutions. We then show that first and second-best policies include a pension and a child benefit scheme. Finally, we look at the possibility that intergenerational redistribution might be supported by either a constitution, or some kind of voting equilibrium.

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File URL: http://www.cesifo-group.de/portal/page/portal/DocBase_Content/WP/WP-CESifo_Working_Papers/wp-cesifo-2005/wp-cesifo-2005-12/cesifo1_wp1632.pdf
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Bibliographic Info

Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 1632.

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Date of creation: 2005
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Handle: RePEc:ces:ceswps:_1632

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Keywords: intergenerational cooperation; family; fertility; saving; private transfers; education; child benefits; pensions; self-enforcing constitutions; direct democracy; representative democracy; constitutions;

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References

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  1. Farrell, Joseph & Maskin, Eric, 1989. "Renegotiation in repeated games," Games and Economic Behavior, Elsevier, vol. 1(4), pages 327-360, December.
  2. Guido Tabellini, 1989. "The Politics of Intergenerational Redistribution," NBER Working Papers 3058, National Bureau of Economic Research, Inc.
  3. Martin Kolmar, 1997. "Intergenerational redistribution in a small open economy with endogenous fertility," Journal of Population Economics, Springer, vol. 10(3), pages 335-356.
  4. 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.
  5. Alessandro Cigno & Annalisa Luporini & Anna Pettini, 2000. "Endogenous Fertility And The Design Of Family Taxation," CHILD Working Papers wp03_00, CHILD - Centre for Household, Income, Labour and Demographic economics - ITALY.
  6. 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.
  7. BOLDRIN, Michele & RUSTICHINI, Aldo, 1994. "Equilibria with Social Security," CORE Discussion Papers 1994060, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  8. Baland, Jean-Marie & Robinson, James A., 2002. "Rotten parents," Journal of Public Economics, Elsevier, vol. 84(3), pages 341-356, June.
    • Baland, J.M. & Robinson, J.A., 1998. "Rotten Parents," Papers 207, Notre-Dame de la Paix, Sciences Economiques et Sociales.
  9. 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.
  10. Pecchenino, R.A., 1994. "Social Security, Social Welfare and the Aging Population," Papers 9403, Michigan State - Econometrics and Economic Theory.
  11. 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.
  12. Esteban Joan Maria & Sakovics Jozsef, 1993. "Intertemporal Transfer Institutions," Journal of Economic Theory, Elsevier, vol. 61(2), pages 189-205, December.
  13. Eckstein, Zvi & Wolpin, Kenneth I., 1985. "Endogenous fertility and optimal population size," Journal of Public Economics, Elsevier, vol. 27(1), pages 93-106, June.
  14. 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.
  15. Breyer, Friedrich, 1994. "The political economy of intergenerational redistribution," European Journal of Political Economy, Elsevier, vol. 10(1), pages 61-84, May.
  16. 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.
  17. Veall, Michael R., 1986. "Public pensions as optimal social contracts," Journal of Public Economics, Elsevier, vol. 31(2), pages 237-251, November.
  18. Robert Kollmann, 1997. "Endogenous fertility in a model with non-dynastic parental altruism," Journal of Population Economics, Springer, vol. 10(1), pages 87-95.
  19. Verbon, Harrie, 1993. "Public Pensions: The Role of Public Choice and Expectations," Journal of Population Economics, Springer, vol. 6(2), pages 123-35, May.
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Citations

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Cited by:
  1. J. Ignacio Conde-Ruiz & Eduardo L. Gimenez & Mikel Perez-Nievas, 2006. "Millian Efficiency with Endogenous Fertility," Documentos de trabajo - Analise Economica 0037, IDEGA - Instituto Universitario de Estudios e Desenvolvemento de Galicia.
  2. Ermisch, John, 2006. "Fairness in the family: implications for parent-adult child interactions," ISER Working Paper Series 2006-13, Institute for Social and Economic Research.
  3. 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.
  4. 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.
  5. Birchenall, Javier A. & Soares, Rodrigo R., 2009. "Altruism, fertility, and the value of children: Health policy evaluation and intergenerational welfare," Journal of Public Economics, Elsevier, vol. 93(1-2), pages 280-295, February.
  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. Gil Epstein, 2006. "The political economy of population economics," Journal of Population Economics, Springer, vol. 19(2), pages 255-257, June.
  8. Ana Fernandes, 2011. "Altruism, labor supply and redistributive neutrality," Journal of Population Economics, Springer, vol. 24(4), pages 1443-1469, October.

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