Fair Allocations in an Overlapping Generations Economy^{*, †}

This paper investigates fair (i.e., envy-free and efficient) allocations in an overlapping generations economy without production and with two-period lived agents. We show that there is a conflict between no-envy and efficiency when all generations have identical preferences. This conflict crucially depends on the size of the given young age consumption of the initial old generation relative to the young age consumption at the golden-rule. We then show that there exist non-stationary preferences for which such a conflict does not arise, regardless of the young age consumption of the initial old generation.