Gerontocracy Revisited: Unilateral Transfer to the Young May Benefit the Middle-aged

Panu Poutvaara ()

No 275, Discussion Papers from Government Institute for Economic Research Finland (VATT)

Abstract: According to conventional wisdom, intergenerational transfers can survive, in the absence of altruism, only if the old are net recipients. I prove that this need not hold in an overlapping generations model with a fixed factor. For example, the middle-aged owning land may gain by providing public education even when they cannot tax the young and when the young face no credit market constraints. This requires that labor is not mobile. Furthermore, establishing public education may benefit only the generation which pays for education twice, first for itself and then for the next generation.

Keywords: Intergenerational goods; Education; Land; Gerontocracy (search for similar items in EconPapers)
JEL-codes: O15 J12 I20 C00 J62 H52 (search for similar items in EconPapers)
Date: 2002-05-22
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Related works:
Journal Article: Gerontocracy revisited: unilateral transfer to the young may benefit the middle-aged (2004)
Working Paper: Gerontocracy Revisited. Unilateral Transfer to the Young May Benefit the Middle-Aged (2001)
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