We study how the allocation of government expenditures between two major outlays-education and pay-as-you-go social security-affects human capital distribution in an economy with heterogeneous agents. We consider an overlapping generations economy where the government maintains both programs,...

The intertemporal decentralization literature scrutinizes the ability of markets to achieve dynamically optimal allocation of resources. Put differently, it examines the possibility of designing a mechanism enabling short-lived agents to make independent decisions compatible with long-run...