Asset Privatization as Intergenerational Redistribution

Kaiji Chen, Hanming Fang and Yang Tang
Additional contact information
Kaiji Chen: Emory University
Hanming Fang: University of Pennsylvania and NBER
Yang Tang: Nanyang Technological University

PIER Working Paper Archive from Penn Institute for Economic Research, Department of Economics, University of Pennsylvania

Abstract: Rapid economic growth creates large differences in lifetime incomes across generations. This paper examines the intergenerational redistribution generated by subsidized access to appreciating public assets in rapidly growing economies. We show that providing incumbent generations with subsidized access to these assets before future growth is fully capitalized into market values gives them an early claim on subsequent economic growth, thereby redistributing resources from future to incumbent generations. In the context of housing privatization, subsequent capital gains on privatized housing enable homeowners to trade up, further amplifying housing demand, house prices, and intergenerational redistribution. We evaluate the early ownership and capital gains channels of asset-based redistribution in a quantitative equilibrium model calibrated to China’s housing privatization. Relative to more standard pension-based redistribution, we show that asset-based redistribution delivers higher welfare for future cohorts while substantially reducing long-run fiscal burdens once economic growth unexpectedly slows.

Keywords: Asset privatization; Intergenerational redistribution; Housing; Capital gains; Economic transition; Social security (search for similar items in EconPapers)
JEL-codes: E02 E5 G11 G28 H2 (search for similar items in EconPapers)
Pages: 79 pages
Date: 2026-08-09
References: Add references at CitEc
Citations:

Downloads: (external link)
https://economics.sas.upenn.edu/system/files/worki ... per%20Submission.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pen:papers:26-013

Access Statistics for this paper

More papers in PIER Working Paper Archive from Penn Institute for Economic Research, Department of Economics, University of Pennsylvania 133 South 36th Street, Philadelphia, PA 19104. Contact information at EDIRC.
Bibliographic data for series maintained by Administrator ().