The political economy of social security
(1999)
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- Abstract
- We consider a two-period overlapping generations model in which individual voters differ not only according to age but also productivity. In such a setting, a (redistributive) Pay-As-You-Go system is politically sustainable, even when the interest rate is larger than the rate of population growth. The medium wages workers (not the lowest) join the retirees to form a majority and vote for a positive level of social security. This level depends on the difference between population growth and interest rate and on the redistributiveness of the benefit rule.
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Citations
Casamatta, G., Cremer, H., & Pestieau, P. (1999). The political economy of social security (CORE Discussion Papers 1999/55). https://hdl.handle.net/2078.5/77264