The intergenerational state
Subtitle: education and pension
By: Michele Boldrin and Ana Montes.
Contributors: Montes, Ana.
Series: Federal Reserve Bank of Minneapolis, Research Department staff report ;; 336; Staff report (Federal Reserve Bank of Minneapolis. Research Dept. : Online) ;; 336.
Publisher: Federal Reserve Bank of Minneapolis
Published: 2004
Place of publication: [Minneapolis, Minn.]
Language: eng
Format: Electronic resource
Subjects: Education -- Finance.; Pensions.
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.
Notes: Also available in print.
Includes bibliographical references.
Title from PDF file as viewed on 11/10/2004.
System requirements: Adobe Acrobat Reader.
Mode of access: World Wide Web.