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Intergenerational Contracts and Time Consistency: Implications for Policy Settings and Governance in the Social Welfare System

  • Lewis Evans
  • Neil Quigley

    ()

    (The Treasury)

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    In this paper we explore the question of the sustainability of the intergenerational contract that is represented by the current structure of social welfare. We argue that sustainability and time consistency of social welfare policies could be improved by more explicit recognition of the social welfare system as a relational contract that should be reinterpreted in the light of changes in technology, changes in our understanding of the incentive effects of different approaches to social welfare provision, and changes in society as a whole. We suggest that too much of our social welfare policy is based on approaches developed under the social and economic conditions and technology of the past, and that this is a key source of the potential challenge to the sustainability of current policies.

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    File URL: http://www.treasury.govt.nz/publications/research-policy/wp/2013/13-25/twp13-25.pdf
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    Paper provided by New Zealand Treasury in its series Treasury Working Paper Series with number 13/25.

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    Length: 34
    Date of creation: Dec 2013
    Date of revision:
    Handle: RePEc:nzt:nztwps:13/25
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    1. Torsten Persson & Gerard Roland & Guido Tabellini, 2006. "Electoral Rules and Government Spending in Parliamentary Democracies," Levine's Working Paper Archive 321307000000000249, David K. Levine.
    2. Barro, Robert J., 1974. "Are Government Bonds Net Wealth?," Scholarly Articles 3451399, Harvard University Department of Economics.
    3. Matz Dahlberg & Karin Edmark & Heléne Lundqvist, 2011. "Ethnic Diversity and Preferences for Redistribution," CESifo Working Paper Series 3325, CESifo Group Munich.
    4. Gabrielle Demange & Robert Fenge & Silke Uebelmesser, 2012. "Financing Higher Education in a Mobile World," CESifo Working Paper Series 3849, CESifo Group Munich.
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    6. Gary S. Becker & Kevin M. Murphy, . "The Family and the State," University of Chicago - Population Research Center 87-15, Chicago - Population Research Center.
    7. Andrew Coleman, 2012. "Pension Payments and Receipts by New Zealand Birth Cohorts, 1916–1986," Working Papers 12_11, Motu Economic and Public Policy Research.
    8. Iván Werning, 2007. "Optimal Fiscal Policy with Redistribution," The Quarterly Journal of Economics, MIT Press, vol. 122(3), pages 925-967, 08.
    9. Scott, Robert E, 1990. "A Relational Theory of Default Rules for Commercial Contracts," The Journal of Legal Studies, University of Chicago Press, vol. 19(2), pages 597-616, June.
    10. Martin Feldstein, 2005. "Structural Reform of Social Security," NBER Working Papers 11098, National Bureau of Economic Research, Inc.
    11. Rainald Borck & Silke Uebelmesser & Martin Wimbersky, 2012. "The Political Economics of Higher Education Finance for Mobile Individuals," CESifo Working Paper Series 3877, CESifo Group Munich.
    12. Feldstein, Martin, 2005. "Structural Reform of Social Security," Scholarly Articles 2794830, Harvard University Department of Economics.
    13. Kydland, Finn E & Prescott, Edward C, 1977. "Rules Rather Than Discretion: The Inconsistency of Optimal Plans," Journal of Political Economy, University of Chicago Press, vol. 85(3), pages 473-91, June.
    14. Seater, John J, 1993. "Ricardian Equivalence," Journal of Economic Literature, American Economic Association, vol. 31(1), pages 142-90, March.
    15. Evans, Lewis & Richardson, Martin, 2002. "Trade Reform in New Zealand: Unilateralism at Work," Working Paper Series 3934, Victoria University of Wellington, The New Zealand Institute for the Study of Competition and Regulation.
    16. Paul A. Samuelson, 1958. "An Exact Consumption-Loan Model of Interest with or without the Social Contrivance of Money," Journal of Political Economy, University of Chicago Press, vol. 66, pages 467.
    17. Lewis Evans & Graeme Guthrie, 2012. "Price-cap regulation and the scale and timing of investment," RAND Journal of Economics, RAND Corporation, vol. 43(3), pages 537-561, 09.
    18. Lewis Evans & Arthur Grimes & Bryce Wilkinson, 1996. "Economic Reform in New Zealand 1984-95: The Pursuit of Efficiency," Journal of Economic Literature, American Economic Association, vol. 34(4), pages 1856-1902, December.
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