We consider taxation by a Leviathan government and by a utilitarian government in the presence of heterogenous locations within a country, when migration from one country to another is and is not possible. In a closed economy, a utilitarian government may transfer income from the poor to the...

We propose a dynamic general equilibrium model with human capital accumulation to evaluate the economic consequences of compulsory services (such as military draft or social services). Our analysis identifies a so far ignored dynamic cost arising from distortions in time allocation over the...

In earlier literature, the suggested Pareto improvements in pay-as-you-go (PAYG) systems have relied on the presence of externalities or the possibility of intragenerational redistribution. We show that neither assumption is necessary in an economy with intergenerational trade in a fixed factor...

This paper proposes and analyzes a model of a "European economy" with three overlapping generations, redistributive social security, and public universities without tuition. Individuals differ ex ante. The effect of wage tax rate on occupational choice and the voting equilibrium of wage tax rate...

While the effect of social security systems on retirement decisions has received much attention, the impact of these systems on individuals' incentives to invest in their human capital has not been analyzed. We integrate human capital investment and retirement decisions in a simple analytical...

We analyze the topical question of how the compensation of elected politicians affects the set of citizens choosing to run. To this end, we develop a sparse and tractable citizen-candidate model of representative democracy with ability differences, informative campaigning and political parties....

A relatively high labor-intensity in government-run entities need not imply slack in their organization. Rather, it is a rational reaction to various forms of wage tax advantage that the public sector has over private firms. Even though an unequal tax treatment of public and private sectors...

Corporate success stories often resemble a snowball. We show how initial luck in hiring talented people, the resulting technological advantage, superior corporate culture, and status-seeking by workers and by consumers can make small initial differences generate large differences over time.

It has been argued that in the absence of altruism, intergenerational transfers can survive only if the old are net recipients. I prove that this need not hold in an over-lapping generations model with a fixed factor. For example, the middle-aged owning land may gain by providing public...