Fair Accumulation under Risky Lifetime

Pré-publication, Document de travail: Individuals save for their old days, but not all of them enjoy the old age. This paper characterizes the optimal capital accumulation in a two-period OLG model where lifetime is risky and varies across individuals. We compare two long-run social optima: (1) the average utilitarian optimum, where steady-state average welfare is maximized; (2) the egalitarian optimum, where the welfare of the worst-o¤ at the steady-state is maximized. It is shown that, under plausible conditions, the egalitarian optimum involves a higher capital and a lower fertility than the utilitarian optimum. Those inequalities hold also in a second-best framework where survival conditions are exogenously linked to the capital level.

Auteur(s)

Grégory Ponthière

Date de publication
  • 2012
Mots-clés JEL
D63 E22 I12 J13
Référence interne
  • PSE Working Papers n°2012-39
Version
  • 1