This Paper studies the design of education policies in a setting of successive generations with heterogeneous individuals (high and low earning ability). Parents’ investment in education is motivated by warm-glow altruism and determines the probability that a child has high ability. Education...

The distribution of human capital and income lies at the center of a nexus of forces that shape a country’s economic, institutional and technological structure. I develop here a unified model to analyse these interactions and their growth consequences. Five main issues are addressed. First, I...

The paper studies the political and economic determinants of inter-regional public transfers. It points to an important difference between two alternative federal fiscal constitutions. The paper shows that inter-regional transfers can be determined either by a federation-wide vote over a...

The paper seeks to explain the huge cross country variation in private pension funding, shaped by historical choice made when universal pension systems were created after the Great Depression. According to Perotti and von Thadden (2006), large inflationary shocks due to war damage devastated...

We study the effects of German unification on macroeconomic variables in a model with capital accumulation, skill differences and a welfare state. The integration of two economies differing in capital holdings and skill distribution is similar to a mass migration of low-skilled agents holding no...