Generational Distribution of Fiscal Burdens: A Positive Analysis

Uchida, Yuki and Ono, Tetsuo (2021): Generational Distribution of Fiscal Burdens: A Positive Analysis.

Abstract

This study presents a political economy model with overlapping generations to analyze the effects of population aging on fiscal policy formation and the resulting distribution of the fiscal burden across generations. The analysis focuses on the role of endogenous labor supply and shows that increased political weight of the old, arising from population aging, leads to an increase in the ratios of public debt and labor income tax revenue to GDP and an initial decrease followed by an increase in the ratio of capital income tax revenue to GDP. The result fits well with the evidence in OECD countries.

• Item Type: MPRA Paper
• Language: English
• Keywords: Generational burden; Overlapping generations; Political economy; Population aging; Public debt
• Subjects: D - Microeconomics > D7 - Analysis of Collective Decision-Making > D70 - General; E - Macroeconomics and Monetary Economics > E2 - Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy > E24 - Employment ; Unemployment ; Wages ; Intergenerational Income Distribution ; Aggregate Human Capital ; Aggregate Labor Productivity; E - Macroeconomics and Monetary Economics > E6 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook > E62 - Fiscal Policy; H - Public Economics > H6 - National Budget, Deficit, and Debt > H60 - General

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Uchida, Y., and Ono, T., 2021. Political economy of taxation, debt ceilings, and growth. European Journal of Political Economy. https://doi.org/10.1016/j.ejpoleco.2020.101996