Bequests as a heir "disciple device."

This paper develops a model ofinter vivos gifts and bequests in a setting of moral hazard and adverse selection. Altruistic parents do not perfectly know how much effort their children make to earn their living, nor do they know their true level of ability.Inter vivos gifts take place prior to the realization of the children's earnings whereas at the moment of bequests, parents do observe them. We show that an optimal transfer policy generally uses a mix ofinter vivos gifts — deemed as more efficient — and bequests — deemed as more redistributive.We are thankful to Allessandro Cigno, Jacques Cremer, Claude d Aspremont and anonymous referees for their comments.Responsible editor: Alessandro Cigno     

Optimal pension funding with demographic instability and endogenous returns on investment

This paper tries to explore some optimal funding policies for pension systems in a general equilibrium setting where funding affects returns on investment and wages through its impact on capital formation. This is done in the context of irregular demographic evolutions such as those expected in developed countries for the next century. Particular attention is given to the intergenerational welfare criterion which is used for designing optimal policies. It appears that funding receives low justification with a welfare criterion which assumes a high substitutability between consumptions of successive cohorts, implying a low concern for intergenerational equity. Funding is highly justified in the opposite case where a high level of consumption for some cohorts is not considered as a compensation for low consumption by others. However the optimal patterns of transfers and savings which are found in this latter case are not straightforward. Some simpler funding rules are explored in the last section of this paper, which show that non-optimal funding may imply, on the contrary, a high level of inequality between subsequent generations.Paper presented at the ISPE-conference Fiscal implications of an ageing population, May–June 1990 at Vaalsbroek, The Netherlands. We thank Pierre Pestieau for his remarks on a first draft of this paper. We also thank for their comments our two discussants Carol Propper and Lans Bovenberg, as well as other participants to the ISPE Conference. Any errors are, of course, ours.     

Pay-as-you-go social security in a changing environment

In this paper, we examine the optimal pay-as-you-go social security scheme which reallocates resources across generations in a changing environment, that is, with fluctuations in population growth rates and in productivity levels. We use an overlapping generations model along with a social welfare function consisting of the sum of generational utilities either unweighted or weighted by population size and a discount factor. We show how intergenerational resource sharing can be used to improve social welfare even though the extent of intergenerational redistribution is hampered by payroll tax deadweight losses in the spirit of the optimal taxation literature. Also it appears that resource sharing is much more restricted in a closed economy that in an open economy, which is not subject to a national resource constraint at each period of time. This paper was presented at the 1990 ISPE-Conference on the Fiscal Implications of an Ageing Population, Vaalsbroek Castle, Netherlands. The authors wish to thank the participants and particularly B. van Praag and W. Peters for their comments. They also thank the two referees and Philippe Michel for very helpful comments and discussions. The financial support of CIM during his sabbatical year is greatly acknowledged by the second author.     

On testing Easterlin's hypothesis using relative cohort size as a proxy for relative income

Measures of Canadian fertility (total fertility rate and fifteen-year age-specific fertility rate F_15–29) and relative cohort size (population aged 30–64 years divided by population aged 15–29 years) show a close co-movement between 1940 and 1976 but record a marked departure since then. The application of cointegration techniques to these series (1921–1988) shows that they do not form an equilibrium relationship even over the period 1940–1976. Contrary to the expected relationship between relative cohort size and relative income, income data by age groups show that there is no tight relationship between them. The absence of an equilibrium relationship between relative cohort size and fertility, therefore, does not necessarily imply that Easterlin's hypothesis is false.I would like to thank Paul Maxim for allowing me to use his data set for this analysis. My thanks are also due to Peter Smith and three anonymous referees for their constructive comments on this work.     

Population dynamics and life-cycle consumption

This paper presents a model where aggregate consumption depends on both the level of wealth and the age structure of population. The explicit consideration of an endogenous rate of time preference permits to analyze the important role of population ageing as a determinant of aggregate saving. Received: 23 October 2001/Accepted: 13 February 2002 I would like to thank an anonymous referee for his comments. Financial support from CNR and MURST is gratefully acknowledged. Responsible editor: Alessandro Cigno.     

Mothers,fathers and children after divorce: The role of institutions

In recent years the increase in the divorce rate in many advanced countries and the predominance of female-headed families among the poor has generated much interest in the relationship between divorce and the welfare of mothers and children. In this paper I will review a small body of economic literature which has been recently developed in order to analyze the economic consequence of divorce on the welfare of fathers, mothers and children under alternative behavioral assumptions. Important economic and econometric issues arise from an analysis of welfare in non intact households as compared with intact households. In particular the focus is on the role that institutions play in post-divorce arrangements and important implications concerning policies for child support, custody, and visitation.Presidential Address of the Annual Congress of ESPE2000 held on June 15, 2000 in Bonn. I would like to thank Christopher Flinn, Rocio Ribero, Maristella Botticini and two anonymous referees for their helpful comments. Responsible editor: Alessandro Cigno.     

What Did Stiglitz,Sen and Fitoussi Get Right and What Did They Get Wrong?

The aim of this critical assessment of the Stiglitz, Sen and Fitoussi Report was to provoke discussion and improvements in future developments of quality of life research undertaken by official statistical agencies. I would like to thank Jochen Jesinghaus and Andrea Saltelli for their helpful comments on earlier drafts of the paper.     

Optimal age of retirement and population growth

The purpose of this paper is to study intergenerational optimal resources sharing when the social planer can choose the retirement age in addition to consumptions and investment. We use the extension of the Diamond analysis by Hu [1979] that incorporates endogenous retirement age. We found that the optimal retirement age is an increasing function of the population growth rate if the elasticity of substitution of old agents' labor for young agents' labor is lower than one. In the millian case, when the size of a population does not matter, and when the elasticity of substitution of old agents' labor for young agents' labor is strictly higher than one, the optimal retirement age is a decreasing function of the population growth rate. In the benthamite case, the change in the optimal retirement age is indeterminate. Received: 19 February 1999/Accepted: 27 February 2001 All correspondence to Bertrand Crettez. We would like to thank Jean-Pierre Vidal for very helpful comments on an earlier draft. An anonymous referee provided insightful comments on a previous version of this paper. Responsible editor: Alessandro Cigno.     

Capital accumulation,endogenous population growth,and Easterlin cycles

In this paper we attempt to explain the occurrence of population cycles in industrialised economies where the birth rate depends on the difference between the actual and the expected consumption rate. This model of an endogenously growing population brings together Easterlin's idea of an adapting aspiration level with the neoclassical optimal growth paradigm. It is shown that in this highly aggregated demo-economic system (i.e., without inclusion of the age structure of a population) swings both in the economic and demographic variables may exist. The reason behind this strange optimal behaviour is identified to be an intertemporal substitution effect between current and future levels of consumption.We wish to thank A. Novak for helpful assistance and an anonymous referee for useful comments. Financial support by the Austrian Science Foundation under contract No. P6601 is acknowledged.     

Social aspirations and choice of fertility: why can status motive reduce per-capita growth?

To examine the relationship between social aspirations, fertility choices and growth performances, we develop a R&D-based model in which individuals care about the number of children they bring up and their social status. In such an economy, we find that stronger status motives have a negative effect on growth. The reason is that individuals bring up fewer children, as children are an obstacle to the achievement of their social status. Introducing an endogenous choice of quality for children, we show that stronger status motives lead individuals to bring up fewer but higher quality children. In this case, social aspirations heighten the desire of parents to substitute the quantity for the quality of children because education of children fosters society’s productive ability, indirectly improving parents’ social status. I would like to thank Michael Bleaney, Juntip Boonprakaikawe, Trudy Owens, Kaipichit Ruengsrichaiya, two anonymous referees, and one editor of the review for their helpful comments and suggestions. I am grateful to the University of Nottingham (UK) for its support during the redaction of this paper.     

Sexist ideology and the evaluation criteria used to assess women's integration into the army

This article is a reaction to the 1978 Evaluation of Women in the Army report issued by the U.S. Army. It looks at the criteria used in women's evaluation in terms of the sexist ideology prevalent in the military system. Those issues which are identified by the Army as problematic and which affect policies regarding women's full integration into the Army are discussed at length.An earlier version of this paper was presented at the annual meeting of the Southern Sociological Society in April, 1983. I am indebted to Nijole V. Benokraitis for her comments at that time. I would also like to thank John Sibley Butler, Susan Marshall and Marie Crane for their helpful comments. Any opinions, conclusions, and recommendations, whether expressed or implied, are those of the author.     

Optimal prevention when coexistence matters

We study the optimal subsidy on prevention against premature death in an economy composed of two-person households, where the survival of the spouse matters, either because of self-oriented coexistence concerns or because of altruism. Under a noncooperative household model, the laissez-faire prevention levels are shown to be lower than the first-best levels, to an extent that is increasing in self-oriented coexistence concerns and decreasing in spousal altruism. The decentralization of the social optimum thus requires a subsidy on prevention depending on the precise type of coexistence concerns. Our results are shown to be globally robust to the introduction of imperfect observability of preferences, life insurance, imperfect marriage matching, and myopia. We conclude by studying the optimal prevention in a cooperative household model with unequal bargaining power.     

On age distribution of population,government expenditure and fiscal federalism

In this paper I build a simple model to analyze the consequences that population growth imposes on the relative needs of expenditure of governments in a fiscal federalism setup. I assume, first, that some government expenditure items can be classified according to the age of their recipient individuals and, second, that different levels of government are usually assigned different expenditure programs. The implication is that, for an initially given level of effective public good provision, changes in the size of population as well as in its age structure will influence the composition of public expenditure for different layers of administration in a different manner.I would like to thank Jordi Caballé, Ángel de la Fuente, Javier Gardeazabal, Federico Grafe, Juan Urrutia and Jesús Vázquez for their valuable comments and suggestions. Two anonymous referees helped improve the initial version. Remaining errors and shortcomings are my own responsibility. Financial support from UPV 035.321-HA090/92 and UPV 035.321-HA130/93 is gratefully acknowledged.     

Geography, demography, and early development

This paper explores the role of geography in early development. It presents a model where the odds of survival are higher in geographically favorable regions. In such regions, higher life expectancy prompts parents to devote more of their resources to old-age consumption and enables them to invest relatively more in the quantity and quality of their offspring. Investment in education, together with population growth, helps geographically-favorable economies to attain high levels of a more educated population that is necessary for sustained economic growth. The empirical evidence is generally supportive of the view that geographic attributes influenced regional population levels in Europe and its colonial offshoots around 1500 A.D. and that they affected population levels and educational attainment in low-income countries of the 1990s. For useful comments and suggestions I thank the editor, two anonymous referees, Daron Acemoglu, Ann Carlos, Phil Graves, Naci Mocan, Oded Stark, seminar participants at the University of Colorado at Boulder, the University of Colorado at Denver, and the 2002 Royal Economic Society Annual Conference. I owe a special debt of gratitude to my advisor Herschel Grossman who passed away in October 2004 after leaving his mark on many of us in the profession. The standard disclaimer applies. Responsible editor: Alessandro Cigno.     

Tax reform,population ageing and the changing labour supply behaviour of married women

The burden of financing retirement incomes in an ageing population is predicted to rise sharply in future decades. This paper investigates the effects of reforms to the Australian tax-benefit system involving a greater reliance on proportional taxation for raising revenue and a more targeted welfare system for cutting government expenditure, in order to reduce expected budget deficits. Estimates of changes in net incomes and hours of work suggest that reforms of this kind shift the tax burden to lower and middle income households with a second earner and that they can have counter-productive labour supply effects. The study explores the impact of projected increases in female work force participation and illustrates the importance of shifts in the labour supply of married women in predicting the fiscal effects of demographic change.I wish to thank the discussants of this paper, Sijbren Cnossen and Hiromitsu Ishi, for their detailed and constructive comments which have been most helpful in revising the paper. Thanks are also due to John Buchanan, Glenn Jones, John McCallum and Elizabeth Savage for their comments and suggestions.This research has been supported by a grant from the Australian Research Council.     

Africa's expanding population: old problems,new policies

Sub-Saharan Africa faces an historic challenge: to achieve economic and social progress while experiencing extraordinary population growth. With an estimated 1989 population of 512 million, the 42 countries of sub-Saharan Africa have the highest birth and death rates of any major world region. While death rates have fallen since the 1960s, persistently high birth rates yield annual growth rates above 3% in many countries. The United Nations projects that the region's population will increase 2.7 times by 2025--to 1.4 billion. Throughout the region, population has outstripped economic growth since the mid-1970s. In addition, many African countries are experiencing an epidemic of AIDS (Acquired Immunodeficiency Syndrome). The extent and demographic impact of the epidemic still are unknown, but disturbing social and political effects are already being felt. The region's population growth will slow only when African couples begin to have fewer children. The average number of children per woman ranges from 6 to 8 for most countries. The Africans' preference for large families is deeply rooted in the culture and fed by the perceived economic benefits they receive from their children. Economic stagnation during the 1980s prompted many national governments to recognize that rapid population growth was hindering their socioeconomic development. The political climate has shifted away from pronatalist or laissez-faire attitudes toward official policies to slow population growth. The policy formation process--detailed here for 4 countries (Zambia, Nigeria, Zaire, and Liberia)--is ponderous and beset with political and bureaucratic pitfalls, However, policy shifts in more and more countries combined with evidence of increased contraceptive use and fertility downturns in a few countries give some hope that the region's extraordinary population growth may have peaked and will start a descent. Whatever the case, the decade of the 1990s will be crucial for the future of sub-Saharan Africa.     

Age structure,education, and the transmission of technical change

This paper presents a model of optimal economic growth with exogenous technical change that is embodied in people. That is, newly invented techniques can be used only if the production unit engages labour that has been trained to produce according to this new technique. The model illustrates the negative impact of slower population growth on the rate of technology adaptation. When the growth rate of population is high, the introduction of technological innovations into the production process is primarily achieved through the constant influx of recently educated young people. When the relative share of this influx is reduced, increased education becomes necessary in order to prevent the gap between technology in theory and technology in practice from becoming too large.I would like to thank an anonymous referee for helpful comments     

Subjective utility and plans for childbearing and employment

Nonrecursive models of plans for childbearing and employment were estimated for a sample of white married women, age 26 to 36, with one or two young children. Women's concerns about care of children already born did inhibit their employment plans. Further, plans to have another child in the near future had a direct negative effect on full-time employment plans among women with one child, but not among women with two children. No direct effects of childbearing plans on part-time employment plans were found. In contrast to earlier research on longterm childbearing and employment plans, no direct effects of employment plans on plans for childbearing were found. It is suggested that attainment of the two-child family marks a turning point in the relation between childbearing and wives' employment.This research was partially supported by grants from the Center for Population Research, NICHD to Battelle Human Affairs Research Centers, Seattle, Washington (1-R01-HD10683), and to the Center for Demography and Ecology, University of Wisconsin, Madison (1-R01-HD05876). I wish to thank Andrew R. Davidson for the opportunity to conduct the research. I am also grateful to Pamela Oliver, Larry Bumpass, and the two anonymous reviewers for their constructive comments on earlier versions of this article.     

Population size and environmental quality

This paper presents a simple general equilibrium analysis of first best allocations in an economy where a consumption good is produced using labor. Production results in pollution, which is a public bad. Pollution abatement can be achieved either by restricting production or by using additional labor. We consider how the first best allocation and Pigouvian tax vary with population size. Consumers are unambiguously worse off when the population is larger, but not necessarily due to increased pollution. In fact, optimal policy on how pollution and labor should vary with population size is very sensitive to preferences and technology. The best response to an increase in population size might be either to increase or to decrease emissions and/or labor, depending on functional forms and parameters. However, given separable preferences and some convexity, the optimal emissions tax increases, and the first best level of per-capita consumption decreases with population size. The paper also considers the extent to which exogenous technical progress can overturn these conclusions. Received August 28, 1996 / Accepted January 27, 1997     

Diet,mortality and life expectancy A cross national analysis

There are numerous reasons why mortality and life expectancy vary between countries. Epidemiological studies seem to indicate that dictary variations may be among them. A sample of 51 countries studied with data from the International Comparisons Project and other sources, shows that after controlling for nutrient intake, consumption of medical goods and services, income distribution, weather, and literacy, countries with more meat and poultry in their diet have lower life expectancies after age five. The results for infant mortality and child death between one and five indicate that a more animal-intensive diet may be actually be beneficial, especially if fish consumption is increased and meat and poultry consumption reduced.I thank Jere Behrman, David Crawford, Anil Deolalikar, the Managing Editor, two anonymous referees, and especially Samuel Preston for valuable comments, and Alan Heston and Robert Summers for being generous with their time and their data. Financial support was provided by a Compton Foundation Fellowship. All errors remain my responsibility.