Hierarchical and comprehensive school systems are compared with respect to efficiency. At given ability, a student's probability of not completing school rises with increasing mean ability in class. Both school systems can yield identical average failure rates. Given that output losses in case...

The paper deals with the question of whether fiscal transfers re-ceived by cities can be justified by a higher cost of producing publicly provided goods. In the model, increasing the population density implies both a higher output per capita due to agglomeration economies and a higher cost of...

Two alternative relative compensation schemes are compared with respect to total output that can be generated at a given sum of salaries. While the promotion regime guarantees that any salary increase is permanent, the premium system allows a reduction in the income of an agent to the base...

The impacts of introducing work requirements for welfare recipients are studied in an efficiency wage model. If the workfare package is not mandatory, it will reduce employment, profits, and utility levels of employed and unemployed workers. In contrast, mandatory effort requirements will...

In long-term private health insurance contracts, aging provisions are used to flatten premium profiles. An individual would like to change insurers if she perceives a low service quality. The first-best optimum is characterized by provision transfers which are higher for high risks and may be...

This paper discusses the efficiency of a pay-as-you-go pension reform by introducing a child benefit in an endogenous fertility setting. In the model of a small open economy, higher fertility is associated with a reduction of lifetime labor supply. The optimum share of fertility-related pensions...

We consider lifetime health insurance contracts in which ageing provisions are used to smooth the premium profile. The stock of capital accumulated for each individual can be split into two parts: a premium insurance and an annuitised life insurance, where the latter would be transferable...

This paper discusses alternative ways to deal with the positive externalities of having children in a pay-as-you-go pension system. Family allowances are compared to introducing a fertility-related component into the pension formula. In an endogenous labor supply setting, both instruments are...

In an environment with asymmetric information the implementation of a first-best efficient Clarke-Groves-Vickrey (D?Aspremont-Gérard-Varet) mechanism may not be feasible if it has to be self-financing. By using intergenerational transfers, the arising budget deficit can generally be covered in...

The impacts of introducing or tightening time limits on welfare use are studied in an efficiency wage model. Those losing access to regular benefits receive some smaller benefit, which can be interpreted as food stamps. Stricter time limits raise both employment and profits and generally reduce...