Unequal Longevities and Lifestyles Transmission

Abstract

Whereas studies on the optimal taxation under endogenous longevity assume a …xed heterogeneity of lifestyles, this paper considers the optimal tax policy in an economy where unequal longevities are the unintended outcome of di¤erences in lifestyles, and where lifestyles are transmitted across generations. For that purpose, we develop a three-period OLG model where the population, who ignores the negative impact of excessive work on longevity, is partitioned in two groups with di¤erent tastes for leisure, and follows an adaptation/imitation process à la Bisin and Verdier (2001). The optimal short-run and long-run Pigouvian taxes on wages are shown to di¤er, because the latter correct agents’myopia, but also internalize intergenerational externalities due to the socialization process.

Cite this paper

@inproceedings{Ponthiere2008UnequalLA, title={Unequal Longevities and Lifestyles Transmission}, author={Gregory Ponthiere and Gregory Ponthierey and Alberto Bisin and Giacomo Corneo and Philippe De Donder}, year={2008} }