FINANCIAL CONSISTENCY IN LONGITUDINAL MICROSIMULATION: HOMEMAKER PENSIONS RE‐EXAMINED

Transfer programs, including public pension plans, do not generate wealth. In this paper methods of distributional analysis that lack budget constraints and are prone to illusions of wealth creation are criticized. A microsimulation analysis reported in “Homemaker Pension and Lifetime Redistribution” (Wolfson, 1988) is repeated using a conceptual framework that imposes a balance between the positive and negative impacts of transfer programs. This alternate analytical perspective reverses the distributional conclusions of the earlier study conducted using the same model.