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Fiscal policy, composition of intergenerational transfers, and income distribution


  • Jaime Alonso-Carrera
  • Jordi Caballé
  • Xavier Raurich


In this paper, we characterize the relationship between the initial distribution of human capital and physical inheritances among individuals and the long-run distribution of these two variables. In a model with indivisible investment in education, we analyze how the initial distribution of income determines the posterior intergenerational mobility in human capital and the evolution of intragenerational income inequality. This analysis enables us in turn to characterize the effects of fiscal policy on future income distribution and mobility when the composition of intergenerational transfers is endogenous. We find that a tax on inheritance results in both less intergenerational mobility and smaller investment in human capital. However, a tax on labor income may promote human capital accumulation if the education premium is sufficiently high.

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  • Jaime Alonso-Carrera & Jordi Caballé & Xavier Raurich, 2009. "Fiscal policy, composition of intergenerational transfers, and income distribution," Working Papers 387, Barcelona Graduate School of Economics.
  • Handle: RePEc:bge:wpaper:387

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    References listed on IDEAS

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    Cited by:

    1. Jaime Alonso-Carrera & Jordi Caballé & Xavier Raurich, 2016. "Intergenerational Mobility under Education-Effort Complementarity," UB Economics Working Papers 2016/351, Universitat de Barcelona, Facultat d'Economia i Empresa, UB Economics.
    2. Chatzouz, Moustafa, 2014. "Government Debt and Wealth Inequality: Theory and Insights from Altruism," MPRA Paper 77007, University Library of Munich, Germany.
    3. Lorenzo Burlon, 2017. "Public expenditure distribution, voting, and growth," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 19(4), pages 789-810, August.
    4. Chih-Chin Ho & Ching-Yang Lin & Cheng-Tao Tang, 2013. "How Do Income and Bequest Taxes Affect Income Inequality? The Role of Parental Transfers," Working Papers EMS_2013_10, Research Institute, International University of Japan.
    5. Jordi Caballé, 2016. "Intergenerational mobility: measurement and the role of borrowing constraints and inherited tastes," SERIEs: Journal of the Spanish Economic Association, Springer;Spanish Economic Association, vol. 7(4), pages 393-420, November.

    More about this item


    altruism; Intergenerational Transfers; human capital; income distribution;

    JEL classification:

    • D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy; Intergenerational Transfers
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • E13 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Neoclassical
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy


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