Efficient education subsidization and the pay-as-you-use principle

Li, Bei; Zhang, Jie

doi:10.1016/j.jpubeco.2015.07.002

Cited by 9 publications

(5 citation statements)

References 45 publications

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“…It should be noted that the feasible set in the welfare optimization problems may not be convex and therefore the first-order conditions above are necessary, but not sufficient for the solution to be a maximum (see Abio et al, 2004, Conde-Ruiz et al, 2010, Fanti and Gori, 2012, De La Croix et al, 2012, Yew and Zhang, 2013and Li and Zhang, 2015. Thus for the solution to be a social optimum we assume:…”

Section: The Modelmentioning

confidence: 99%

Social security and endogenous demographic change: child support and retirement policies

Cipriani

Fioroni

2021

Journal of Pension Economics and Finance

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This paper studies retirement and child support policies in a small, open, overlapping-generations economy with PAYG social security and endogenous retirement and fertility decisions. It demonstrates that neither fertility nor retirement choices necessarily coincide with socially optimal allocation, because agents do not take into account the externalities of fertility and the elderly labor supply in the economy as a whole. It shows that governments can realize the first-best allocation by introducing a child allowance scheme and a subsidy to incentivize the labor supply of older workers. As an alternative to subsidizing the elderly labor supply, we show that the first-best allocation can also be achieved by controlling the retirement age. Finally, the model is simulated in order to study whether the policies devoted to realizing the social optimum in a market economy could be a Pareto improvement.

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Section: The Modelmentioning

confidence: 99%

Social security and endogenous demographic change: child support and retirement policies

Cipriani

Fioroni

2021

Journal of Pension Economics and Finance

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“…4 In accordance with an extensive literature in the field we employ the Millian approach which assumes that the weight of a generations utility in the social welfare function is independent of its size (see for example van Groezen et al, 2003;Zhang, 2003;Zhang and Zhang, 2007;Li and Zhang, 2015). Alternatively, one might assume the existence of A-efficient Assuming that capital does not depreciate, the total resources of the economy, comprising production and debt creation minus interest payments, are allocated to the consumption of the young and old, the cost of raising children q, the expenditure for children's education e t and domestic investments:…”

Section: Definitionmentioning

confidence: 99%

Human capital and pensions with endogenous fertility and retirement

Cipriani

Fioroni

2023

Macroecon. Dynam.

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We study an OLG model with child policies and a PAYG pension with endogenous retirement and fertility. The result of the planned economy is compared to the decentralized competitive equilibrium deriving optimal policies. We show that in the presence of a PAYG pension system, the optimal policy mix includes an education subsidy and a subsidy for the supply of labor in old age. Fertility should be taxed or incentivized depending on whether there is full or partial retirement, and on the parameters. We focus on the parameter reflecting the deterioration of human capital and show that a child tax may be required.

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“…This contrasts with the 'modern' welfare analysis, which emphasises the deadweight losses from different types of taxes and/or intergenerational spillover benefits from spending on education and human capital; and considers how 'tax smoothing', subject to the intertemporal budget constraint, can reduce deadweight losses over time (Reitschuler 2010;Li and Zhang 2015). Under that approach, tax smoothing and 'optimal deficits' contribute to efficient public finances.…”

Section: The Italian Fiscal Traditionmentioning

confidence: 99%