The Macroeconomics Seminar:
Time: 12:15 pm – 13:30 pm
Date: 13 th of June 2022

Room 3001

PEREZ-NIEVAS Mikel (Universidade de Santiago de Compostela) “Efficiency with Endogenous Population Growth. Do Children have too Many Rights?”

Abstract : Fertility rates are declining in many countries. But, are these fertility rates inefficiently low? This paper addresses this question by exploring the efficiency properties of equilibria in an overlapping generations setting with endogenous fertility and dynastic parental altruism, using a particular formulation of the notion of P-efficiency proposed by Golosov, Jones and Tertilt (2007). In this formulation, new lives increase social welfare only if the agents living those lives are not worse off than those agents of the same generation living in any allocation. In a similar setting, Schoonbroodt and Tertilt (2014) have shown that any equilibrium for which non-negativity constraints on intergenerational transfers are binding is A-inefficient (and, under the assumption that new lives always increase social welfare, also P-inefficient), which suggests that children might have too many rights from the point of view of efficiency. In contrast, I characterize symmetric, P-efficient allocations as the equilibria arising from different distribution of rights among the agents. Although some distributions of rights may give rise to dynamically inefficient allocations, I show that many equilibria are P-efficient even when non-negativity constraints on intergenerational transfers are binding. Thus, except for dynamically inefficient equilibria, there is no need to alter children rights in order to achieve a weaker notion of efficiency.

Organizers:
Jean-Baptiste MICHAU (Polytechnique)

Sponsors:
CREST