Whereas studies on the optimal taxation under endogenous longevity assume a fixed heterogeneity of lifestyles, this paper considers the optimal tax policy in an economy where unequal longevities are the unintended outcome of differences in lifestyles, and where lifestyles are transmitted across generations. For that purpose, we develop a three-period OLG model where the population, who ignores the negative impact of excessive work on longevity, is partitioned in two groups with different tastes for leisure, and follows an adaptation/imitation process à la Bisin and Verdier (2001). The optimal short-run and long-run Pigouvian taxes on wages are shown to differ, because the latter correct agents'myopia, but also internalize intergenerational externalities due to the socialization process.
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Paper provided by PSE (Ecole normale supérieure) in its series PSE Working Papers with number
2008-68.
References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
LEROUX, Marie-Louise & PESTIEAU, Pierre & PONTHIéRE, GrŽgory, 2008.
"Should we subsidize longevity?,"
CORE Discussion Papers
2008058, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
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