 Can Inheritances Alleviate the Demographic Burden?Erik Lueth No 2001/097, IMF Working Papers from International Monetary Fund Abstract: With pay-as-you-go schemes in place, population aging will impose a heavy fiscal burden on young and future cohorts. However, these cohorts may also profit from larger inheritances as the number of heirs declines. The aim of this paper is to explore the compensating potential of private intergenerational transfers. A dynamic, computable general equilibrium model is employed allowing for a pay-as-you-go scheme, various bequest motives, and an endogenous labor supply. The findings are twofold. First, the increase in future generations' inheritances is insufficient to make up for the demographic burden. Second, increasing the inheritance tax during the demographic transition may alleviate the fiscal burden of future generations by improving overall efficiency. Keywords: WP; tax burden; utility function; Bequests; Taxation; computable GEM; factor income; offspring's net wage; price movement; budget constraint; pay-as-you-go scheme; opportunity cost; price effect; labor disincentive effect; capital income share; Labor supply; Demographic change; Tax allowances; Aging; Social assistance spending (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:imf:imfwpa:2001/097 Ordering information: This working paper can be ordered from Access Statistics for this paper More papers in IMF Working Papers from International Monetary Fund International Monetary Fund, Washington, DC USA. Contact information at EDIRC. |
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