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...

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...

We consider taxation by a Leviathan government and by a utilitarian government in the presence of heterogeneous 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...

It may be in the interest of low-ability individuals to subsidize the education of high-ability individuals. Sufficient conditions are surprisingly mild: positive externalities in education and complementarity in production between human capital and labor supllied by the low-ability individuals....

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

Religious participation is much more widespread in the United States than in Europe, while Europeans tend to view sects more suspiciously than Americans. We propose an explanation for these patterns without assuming differences in preferences or market fundamentals. Religious markets may have...

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...

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...

We study the role of self-interest and social preferences in referenda. Our analysis is based on collective purchasing decisions of university students on deep-discount flat rate tickets for public transportation and culture. Individual usage data allows quantifying monetary benefits associated...