Education and lifetime income during demographic transition

Friedhelm Pfeiffer and Karsten Reuß ()

No 13-021, ZEW Discussion Papers from ZEW - Leibniz Centre for European Economic Research

Abstract: The paper studies the power of educational investments in relation to transfers for fostering lifetime income and for reducing income inequality in Germany. The welfare analysis is based on a model of age-dependent human capital accumulation, featuring dynamic complementarities in skill formation over the life cycle, and calibrated for the period of ongoing demographic transition until 2080. If policy aims at reducing the inequality of lifetime income among people of the same generation, educational investments for people younger than or equal to seventeen do a better job compared to transfers in adulthood. In an intergenerational perspective all cohorts born after 1976 will gain from tax-financed additional investments in preschooleducation introduced in 2011. Additional investments into secondary education will, as a rule, not cause life time income to raise enough to compensate its costs.

Keywords: early education; demographic change; inequality over the life span; redistributive policy (search for similar items in EconPapers)
JEL-codes: D63 H55 I20 J11 (search for similar items in EconPapers)
Date: 2013
New Economics Papers: this item is included in nep-age, nep-cwa, nep-dem, nep-edu, nep-eur, nep-hrm and nep-ltv
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:zewdip:13021

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