Working Paper: NBER ID: w10969
Authors: Antoine Bommier; Ronald Lee; Timothy Miller; Stephane Zuber
Abstract: Public transfer programs in industrial nations have massive long term fiscal imbalances, and apparently permit the elderly to benefit through pension and health care programs at the cost of the young and future generations. However, the intergenerational picture is turned upside down when public education is included in generational accounts along with pensions and health care. We calculate the net present value (NPV) of benefits received minus taxes paid for US generations born 1850 to 2090, and find that all generations born from 1950 to 2050 are net gainers, while many of today's old people are net losers. Windfall gains for early generations when Social Security and Medicare started up partially offset windfall losses when public education was started, roughtly consistent with the Becker-Murphy theory.
Keywords: Public Transfers; Intergenerational Equity; Social Security; Medicare; Public Education
JEL Codes: H0
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| public education (H52) | financial well-being of generations born from 1950 to 2050 (G51) |
| social security and Medicare (H55) | financial well-being of earlier generations (born between 1890 and 1920) (D14) |
| social security and Medicare (H55) | net losses for cohorts born after 1960 (J11) |
| earlier benefits from social security and Medicare (H55) | current deficits for younger generations (H60) |
| NPVs for public education (H52) | implicit transfer wealth for government (H87) |
| social security and Medicare (H55) | implicit transfer debt for younger generations (H60) |