Some Inefficiency Implication of Generational Politics and Exchange
Laurence Kotlikoff and
Robert Rosenthal
No 3354, NBER Working Papers from National Bureau of Economic Research, Inc
Abstract:
Generational selfishness is a central assumption in the vast literature on the life cycle model. Much of this literature deals with the impact of alternative government policies in light of self-interested generational behavior. Surprisingly, the choices of governments in virtually all of these analyses are assumed to be independent of the preferences of the selfish generations these governments presumably represent. We address this anomaly by modeling each generation as having a government that strictly represents the economy along a number of dimensions. We consider two types of inefficiencies that have received little or no attention in the literature. The first is the monopolization of factor supplies, and the second is the under- or overprovision of durable public goods. We demonstrate that selfish generations may place sizable marginal taxes on their factor supplies in order to monopolize their factor markets. We also show that selfish generations will provide inefficient levels of durable public goods both at the local and national levels. Finally, we demonstrate that generational inefficiencies can arise even in models of cooperative bargaining because of the first-mover advantage of earlier generations.
Date: 1990-05
Note: AG PE
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)
Published as Economics and Politics, Vol. 5, No. 1, pp. 27-42 (March 1993)
Downloads: (external link)
http://www.nber.org/papers/w3354.pdf (application/pdf)
Related works:
Journal Article: SOME INEFFICIENCY IMPLICATIONS OF GENERATIONAL POLITICS AND EXCHANGE* (1993) 
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:nbr:nberwo:3354
Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w3354
Access Statistics for this paper
More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().