Fair Accumulation under Risky Lifetime

Gregory Ponthiere

PSE-Ecole d'économie de Paris (Postprint) from HAL

Abstract: Individuals save for their old days, but not all of them enjoy the old age. This paper characterizes the optimal capital accumulation in a two-period OLG model where lifetime is risky and varies across individuals. We compare two long-run social optima: (1) the average utilitarian optimum, where steady-state average welfare is maximized; (2) the egalitarian optimum, where the welfare of the worst-off at the steady-state is maximized. It is shown that, under plausible conditions, the egalitarian optimum involves a higher capital and a lower fertility than the utilitarian optimum. Those inequalities hold also in a second-best framework where survival conditions are exogenously linked to the capital level.

Date: 2013-05
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Published in Scottish Journal of Political Economy, 2013, 60 (2), pp.210-230. ⟨10.1111/sjpe.12008⟩

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Related works:
Journal Article: Fair Accumulation under Risky Lifetime (2013)
Working Paper: Fair Accumulation under Risky Lifetime (2013)
Working Paper: Fair Accumulation under Risky Lifetime (2012)
Working Paper: Fair Accumulation under Risky Lifetime (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:pseptp:hal-00813231

DOI: 10.1111/sjpe.12008

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