We show that investing social security in the equity market makes no difference under three assumptions: (1) the transition generation is compensated by public borrowing, (2) the benefit rule is unchanged, and (3) individuals’ portfolio choices are unconstrained. We also show that when these...

The paper presents a model of income distribution that makes use of Gibrat's law of proportionate effect to explain the way income is distributed and how the distribution changes over time in a population made of families characterized by a specific life cycle and initial endowment. The...

Assuming the government cannot fully observe either individual types or incomes and jointly picks optimal taxes and audit policies against evasion can significantly alter standard results from optimal income taxation and tax-evasion models, which treat these separately. We consider this when...