The Role of Inter Vivos Giving in Life-cycle Economies
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This paper studies the welfare aspects of inter vivos giving in a dynamic general equilibrium when a household chooses labor supply. A simple overlapping-generations model emphasizes the flexibility of endogenous labor supply choice to assess whether lowering the gift tax rate leads to Pareto-improvement. My quantitative analysis, calibrated to the U.S. economy, shows that lowering the gift tax rate can be a Pareto-improving reform by generating a 35-percent individual welfare gain in the steady state. The youngest generation receives the greatest gain, which supports gift tax reform in spite of a decrease in leisure during middle-age. This long-run analysis shows that lowering the gift tax rate with elastic labor supply emphasizes the role of inter vivos giving in improving social welfare when the young are the main labor force and capital stock providers in production.
Abstract
This paper studies the welfare aspects of inter vivos giving in a dynamic general equilibrium when a household chooses labor supply. A simple overlapping-generations model emphasizes the flexibility of endogenous labor supply choice to assess whether lowering the gift tax rate leads to Pareto-improvement. My quantitative analysis, calibrated to the U.S. economy, shows that lowering the gift tax rate can be a Pareto-improving reform by generating a 35-percent individual welfare gain in the steady state. The youngest generation receives the greatest gain, which supports gift tax reform in spite of a decrease in leisure during middle-age. This long-run analysis shows that lowering the gift tax rate with elastic labor supply emphasizes the role of inter vivos giving in improving social welfare when the young are the main labor force and capital stock providers in production.
참고문헌 (32)
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