Growth, Longevity and Public Policy

This paper studies the optimal long-run public intervention in a two-period OLG model where the probability of surviving the first period and the length of the second period can be influenced by distinct policies. While the optimal size of public intervention depends on the extra-productivity of public spendings in longevity, its optimal structure is determined by (1) differences in the productivity of each policy; (2) how growth would influence each longevity aspect under laissez-faire; (3) the dependence of each longevity aspect on past achievements. Given competing effects, the optimal intervention can hardly, under additive expected lifetime utility, be strongly unbalanced.growth, longevity, public policy, rectangularization

Longevity and environmental quality in an OLG model

Whereas existing OLG models with endogenous longevity neglect the impact of environmental quality on mortality, this paper studies the design of the optimal public intervention in a two-period OLG model where longevity is influenced positively by health expenditures, but negatively by pollution due to production. It is shown that if individuals, when choosing how much to spend on health, do not internalize the impact of their decision on environmental quality (i.e. the space available for each person), the decentralization of the social optimum requires a tax not only on capital income, but also, on health expenditures. The sensitivity of the optimal second-best public intervention is also explored numerically.longevity, health care, natural environment, pollution

How powerful is demography ? The Serendipity Theorem revisited

Introduced by Samuelson (1975), the Serendipity Theorem states that the competitive economy will converge towards the optimum steady-state provided the optimum population growth rate is imposed. This paper aims at exploring whether the Serendipity Theorem still holds in an economy with risky lifetime. We show that, under general conditions, including a perfect annuity market with actuarially fair return, imposing the optimum fertility rate and the optimum survival rate leads the competitive economy to the optimum steady-state. That Extended Serendipity Theorem is also shown to hold in economies where old adults work some fraction of the old-age, whatever the retirement age is fixed or chosen by the agentsSerendipity Theorem, fertility, mortality, overlapping generations, retirement

Compensating the dead? Yes we can!

An early death is, undoubtedly, a serious disadvantage. However, the compensation of short-lived individuals has remained so far largely unexplored, probably because it appears infeasible. Indeed, short-lived agents can hardly be identified ex ante, and cannot be compensated ex post. We argue that, despite the above difficulties, a compensation can be carried out by encouraging early consumption in the life cycle. In a model with heterogeneous preferences and longevities, we show how a specific social criterion can be derived from intuitive principles, and we study the corresponding optimal policy under various informational assumptions. We also study the robustness of our solution to alternative types of preferences and savings policies.compensation, longevity, mortality, fairness, redistribution

An Age-Differentiated Tax on Bequests

This chapter presents four arguments supporting an age-differentiated tax on bequests, that is, a tax rate on bequests that is varying with the age of the deceased. Whereas those arguments are based on various ethical foundations, and lead to an inheritance tax that can be either increasing or decreasing with the age of the deceased, our comparative analysis leads us to regard one of these arguments as more convincing than the three others: the argument supporting a bequest tax increasing with the age of the deceased, on the grounds of the compensation of unlucky prematurely dead persons in a world of imperfect information

Childlessness, childfreeness and compensation

We study the design of a fair family policy in an economy where parenthood is regarded either as desirable or as undesirable, and where there is imperfect fertility control, leading to involuntary childlessness/parenthood. Using an equivalent con- sumption approach in the consumption-fertility space, we show that the identifica- tion of the worst-off individuals depends on how the social evaluator fixes the refer- ence fertility level. Adopting the ex post egalitarian criterion (giving priority to the worst off in realized terms), we study the compensation for involuntary childless- ness/parenthood. Unlike real-world family policies, the fair family policy does not always involve positive family allowances, and may also include positive childless- ness allowances. Our results are robust to assuming asymmetric information and to introducing Assisted Reproductive Technologies

Counting the Missing Poor in Pre-Industrial Societies

Under income-di¤erentiated mortality, poverty measures su¤er from a selection bias: they do not count the missing poor (i.e. persons who would have been counted as poor provided they did not die prematurely). The Pre-Industrial period being characterized by an evolutionary advantage (i.e. a higher number of surviving children per household) of the non-poor over the poor, one may expect that the missing poor bias is substantial during that period. This paper quanti es the missing poor bias in Pre- Industrial societies, by computing the hypothetical headcount poverty rates that would have prevailed provided the non-poor did not bene t from an evolutionary advantage over the poor. Using data on Pre-Industrial England and France, we show that the sign and size of the missing poor bias is sensitive to the degree of downward social mobility

The Economics of the Long Period

This book provides a non-technical introduction to Unified Growth Theory (UGT), that is, the study of history as a succession of economic regimes. It first focuses on the canonical example of regime shift: the transition from the regime of Malthusian stagnation to the modern regime of sustained economic growth. Then, it broadens the perspectives on historical change by examining other regime shifts involving institutional and environmental forces. This book fills a gap in the market by providing a more accessible treatment of UGT and invites readers to explore ideas of continuity and discontinuity in history

Allocating Pensions to Younger People. Towards a Social Insurance against a Short Life

This book takes as a starting point that welfare states in developed societies do not provide systems of social insurance against the risk of an early death. In contrast to the way in which economically developed countries provide ways of insuring citizens against other possibilities, such as unemployment and disease, no such social insurance mechanism exists for early death. It aims to demonstrate that, despite the impossibility to compensate the victims of a short life once they are identified, and despite the impossibility to identify the persons who will be short-lived (when they are still alive), it is nonetheless possible to construct a social insurance against the risk of a short life by means of age-based statistical discrimination favouring all young persons. Combining philosophical literature with economic analysis, the book re-examines the ethical foundations of social insurance, and proposes a major reform of the welfare state: the construction of a social insurance against a short life. It shows how such an insurance system could be constructed by partially ‘reversing’ existing pension systems, by offering a period of retirement to all young adults before they start their career. Such a ‘reversed’ pension system would allocate more free time and opportunities to younger members of society before they enter the labour market, and, hence, this system would also improve the lives of the – unidentified – young persons who will turn out to die prematurely. The book discusses the social desirability of this new system, as well as its financial feasibility and societal consequences, examining how pension allowances paid to young adults may be financed by the work of senior workers. As such, this book demonstrates how the universal uncertainty about the duration of life can be reconciled with the idea of social justice. With an accessible and interdisciplinary approach, this book will be of interest to academics working in a range of fields, including economics, public finance, social insurance, the economics of ageing and the welfare state, economic ethics and political philosophy