In this paper, we investigate the consequences of the rise in educational attainment on the
US generational accounts. We build on the 1995 accounts of Gokhale et al. (1999) and
disaggregate them per schooling level. We show that low skill newborns are characterized by
a negative generational account (-15.4% of their lifetime labor income) whilst medium and
high skill newborns have positive accounts (26.8 and 32.3% of their lifetime labor income).
Compared to Gokhale et al., our baseline forecast is more optimistic. Nevertheless, the rise
in educational attainment is not strong enough to restore the generational balance. The
current fiscal policy generates a long run deficit. Balancing the budget requires increasing
taxes (by about 1.2%) or reducing transfers (by about 2.7%). These results are robust to
growth and discounting assumptions, to the treatment of education spending. They are
sensitive to assumptions about the schooling level of future generations.
We use cookies to provide you with an optimal website experience. This includes cookies that are necessary for the operation of the site as well as cookies that are only used for anonymous statistical purposes, for comfort settings or to display personalized content. You can decide for yourself which categories you want to allow. Please note that based on your settings, you may not be able to use all of the site's functions.
Cookie settings
These necessary cookies are required to activate the core functionality of the website. An opt-out from these technologies is not available.
In order to further improve our offer and our website, we collect anonymous data for statistics and analyses. With the help of these cookies we can, for example, determine the number of visitors and the effect of certain pages on our website and optimize our content.