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Who Wins and Who Loses? Public Transfer Accounts for US Generations Born 1850 to 2090

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  • Antoine Bommier
  • Ronald Lee
  • Timothy Miller
  • Stephane Zuber

Abstract

Public transfer programs in industrial nations have massive long term fiscal imbalances, and apparently permit the elderly to benefit through pension and health care programs at the cost of the young and future generations. However, the intergenerational picture is turned upside down when public education is included in generational accounts along with pensions and health care. We calculate the net present value (NPV) of benefits received minus taxes paid for US generations born 1850 to 2090, and find that all generations born from 1950 to 2050 are net gainers, while many of today's old people are net losers. Windfall gains for early generations when Social Security and Medicare started up partially offset windfall losses when public education was started, roughtly consistent with the Becker-Murphy theory.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 10969.

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Date of creation: Dec 2004
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Publication status: published as Antoine Bommier & Ronald Lee & Tim Miller & Stéphane Zuber, 2010. "Who Wins and Who Loses? Public Transfer Accounts for US Generations Born 1850 to 2090," Population and Development Review, The Population Council, Inc., vol. 36(1), pages 1-26.
Handle: RePEc:nbr:nberwo:10969

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  1. Alan J. Auerbach & Jagadeesh Gokhale & Laurence J. Kotlikoff, 1991. "Generational Accounts: A Meaningful Alternative to Deficit Accounting," NBER Chapters, in: Tax Policy and the Economy, Volume 5, pages 55-110 National Bureau of Economic Research, Inc.
  2. Antonio Rangel, 2000. "Forward and Backward Intergenerational Goods: A Theory of Intergenerational Exchange," NBER Working Papers 7518, National Bureau of Economic Research, Inc.
  3. David M. Cutler & Louise Sheiner, 2000. "Generational aspects of Medicare," Finance and Economics Discussion Series, Board of Governors of the Federal Reserve System (U.S.) 2000-09, Board of Governors of the Federal Reserve System (U.S.).
  4. Gary S. Becker & Kevin M. Murphy, . "The Family and the State," University of Chicago - Population Research Center, Chicago - Population Research Center 87-15, Chicago - Population Research Center.
  5. Jagadeesh Gokhale & Kent Smetters, 2003. "Fiscal and generational imbalances: new budget measures for new budget priorities," Policy Discussion Papers, Federal Reserve Bank of Cleveland, Federal Reserve Bank of Cleveland, issue Dec.
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Cited by:
  1. Zamac, Jovan, 2007. "Pension design when fertility fluctuates: The role of education and capital mobility," Journal of Public Economics, Elsevier, Elsevier, vol. 91(3-4), pages 619-639, April.
  2. Torben M. Andersen & Joydeep Bhattacharya, 2013. "The Intergenerational Welfare State," CESifo Working Paper Series 4359, CESifo Group Munich.
  3. Ronald Lee, 2012. "Macroeconomic Implications of Demographic Changes: A Global Perspective," IMES Discussion Paper Series 12-E-11, Institute for Monetary and Economic Studies, Bank of Japan.
  4. Paolo Pertile & Veronica Polin & Pietro Rizza & Marzia Romanelli, 2012. "Public finance consolidation and fairness across living generations: the case of Italy," Working Papers 04/2012, University of Verona, Department of Economics.

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