Government intervention as a bequest substitute

Michael Strawczynski*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

6 Scopus citations


A subsequent generations model is used in order to characterize consumption allocation under the future generation's income uncertainty. Altruistic concerns towards future generations give rise to 'precautionary bequests' which act as a hedge on risk. It is shown that given a first-order correlation between mean future income and the present generation's income, government can provide a Pareto improvement through a tax-transfer policy with universal participation. This policy acts as a substitute for precautionary bequests. Distributional aspects of government tax-transfer policy are also discussed.

Original languageAmerican English
Pages (from-to)477-495
Number of pages19
JournalJournal of Public Economics
Issue number3
StatePublished - Mar 1994

Bibliographical note

Funding Information:
Jerusalem, Jerusalem 91905, Israel. *This paper is drawn from the first chapter of my Ph.D. thesis. I am grateful to E. Sheshinski and two anonymous referees of the journal for helpful suggestions. 1 also wish to thank L. Kotlikoff, P. Weil and S. Yitzhaki for their comments. All remaining errors are my own responsibility. Research was supported by a grant from the Brookdale Institute of Gerontology and Adult Human Development in Israel, and Eshel Association for the Planning and Development of Services for the Aged in Israel.


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