The intergenerational state
Published
2004
Publisher
Federal Reserve Bank of Minneapolis
Description
"When credit markets to finance investment in human capital are missing, the competitive equilibrium allocation is inefficient. When generations overlap, this failure can be mitigated by properly designed social arrangements. We show that public financing of education and public pensions can be designed to implement an intergenerational transfer scheme supporting the complete market allocation. Neither the public financing of education nor the pension scheme we consider resemble standard ones. In our mechanism, via the public education system, the young borrow from the middle aged to invest in human capital. They pay back the debt via a social security tax, the proceedings of which finance pension payments. When the complete market allocation is achieved, the rate of return implicit in this borrowing-lending scheme should equal the market rate of return"--Federal Reserve Bank of Minneapolis web site.
Frequently Asked Questions
Who is the author of The intergenerational state?
The intergenerational state was written by Michele Boldrin.
When was The intergenerational state published?
The publication date for this specific edition is 2004. The original work may have been published on a different date.