The political economy of intergenerational cooperation

The paper examines the scope for mutually beneficial intergenerational cooperation, and looks at various attempts to theoretically explain the emergence of norms and institutions that facilitate this cooperation. After establishing a normative framework, we examine the properties of the laissez-faire solution in a pure market economy, and in one where reproductive decisions and intergenerational transfers are governed by self-enforcing family constitutions. We then show that first and second-best policies include a pension and a child benefit scheme. Finally, we look at the possibility that intergenerational redistribution might be supported by either a constitution, or some kind of voting equilibrium.