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Unequal Longevities and Lifestyles Transmission

Gregory Ponthiere

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

Abstract: Whereas studies on the optimal taxation under endogenous longevity assume a fixed heterogeneity of lifestyles, this paper analyses the optimal tax policy in an economy where unequal longevities are the unintended outcome of differences in lifestyles, and where lifestyles are transmitted across generations. For that purpose, we develop a three-period OLG model where the population, who ignores the negative impact of excessive work on longevity, is partitioned in two groups with different tastes for leisure, and follows an adaptation/imitation process à la Bisin and Verdier (2001). The optimal short- and long-run Pigouvian taxes on wages are shown to differ, because the latter correct agents' myopia, but also internalize intergenerational externalities due to the socialization process. The internalization of composition effects raises the Pigouvian tax on the wage of one type of agents, but reduces it on the other type, in such a way as to induce the optimal long-run partition of the population.

Date: 2010-02
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Citations: View citations in EconPapers (14)

Published in Journal of Public Economic Theory, 2010, 12 (1), pp.93-126. ⟨10.1111/j.1467-9779.2009.01449.x⟩

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Journal Article: Unequal Longevities and Lifestyles Transmission (2010) Downloads
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Working Paper: Unequal longevities and lifestyles transmission (2008) Downloads
Working Paper: Unequal longevities and lifestyles transmission (2008) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:hal:pseptp:halshs-00754479

DOI: 10.1111/j.1467-9779.2009.01449.x

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