Abstract:This paper examines the role played by intra-generational tax policies on both long-run economic growth and lifetime welfare in a simple OLG model of neoclassical growth with endogenous fertility. We show that the introduction of such policies - although involving only the income of the young-adult generation in a purely redistributionary way - have important effects on demographic and macroeconomic variables as well as on the lifetime welfare of the representative generation. In particular, provided moderate (low) values of the capital’s weight in technology, a welfare-maximising wage subsidy (tax) rate is picked up. Further, if the size of the capital’s weight in technology relative to those of both the rate of time preference and the parents’ preference for children parameters is high, then the wage subsidy rate may also be used for controlling population growth, trading off between higher welfare and lower fertility. Finally, we prove that a benevolent government (which plays a Stackelberg game in the decentralised economy) is able to achieve the optimal population growth rate, i.e. it behaves as if it were the social planner but allowing individuals to freely choose their optimal values of both periods consumption and the number of children. These results may have applications to government policies for economic growth and welfare.