The Aging of the Population and the Size of the Welfare State

By A. Razin, E. Sadka, P. Swagel. Social Science Research Network, 2002

346 citations recorded by the source corpus.

Data for the United States and countries in Western Europe indicate a negative correlation between the dependency ratio and both labor tax rates and the generosity of social transfers, after controlling for other factors that influence the size of the welfare state. This is the case despite the increased political clout of the dependent population implied by the aging of the population. This paper develops a model of intra-and inter-generational transfers and human capital formation which addresses this seeming puzzle. We show that with democratic voting, a higher dependency ratio can lead to lower taxes or less generous social transfers.

Subfields: Economics and Econometrics

View Paper: https://www.semanticscholar.org/paper/743b88d506fb4cfba96d3bce3172ecdb15fe507a

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In Economics and Econometrics

Citations in the corpus

The Redistributive Design of Social Security Systems (2007, background): “The Effects of Ageing on the Political Economy Equilibrium Existing one-dimensional political economy models (Razin et al., 2002; Galasso and Profeta, 2004) identify two effects of ageing on the size of PAYG social security systems.”
The Future of Social Security (2008, neutral): “and 12 European countries over the period 1965–1992, Razin et al. (2002) argue that the dependency ratio is negatively related to per capita transfers.”
Globalisation and the Composition of Government Spending: An analysis for OECD countries (2006, result): “This result is in line with Razin et al. (2002) who argue that the remaining age groups react to increases of the elderly population by demanding a reduction in social welfare expenditure per capita to avoid further rises in the tax burden.”