The Political Economy of Social Security

By Georges Casamatta, H. Cremer, Pierre Pestieau. Social Science Research Network, 2000

240 citations recorded by the source corpus.

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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1. J. I. C. Ruiz
2. C. Habermann
3. P. Profeta
4. Vincenzo Galasso
5. Hansjakob Fehr

Citations in the corpus

• VOTING, INEQUALITY AND REDISTRIBUTION (2007, unknown): “This implies an intergenerational redistribution from current workers to pensioners, which has led several writers to infer that the social insurance budget is too large in a democracy: the old and those near retirement do not internalize the full costs of the pension system and therefore vote for a”
• One dollar, one vote (2011, unknown): “See, however, Casamatta et al. (2000) for an ‘ends against the middle’ result in the provision of pensions.”
• The political economy of social security: a survey (2002, background): “Tabellini (2000), and later Casamatta et al. (1999) and Persson and Tabellini (2000), suggested that some young individuals may favor positive social security systems because of the within-cohort redistribution element.”
• Risk Sharing and Efficiency Implications of Progressive Pension Arrangements (2008, background): “In order to explain this diversity in the redistributive structure of observed pension systems, Casamatta et al. (2000) as well as Conde-Ruiz and Galasso (2005) apply political-economy models, where the progressivity is determined by the voting outcome.”
• The Redistributive Design of Social Security Systems (2007, methodology): “To a standard formula used in the literature (Casamatta et al., 2000a, b), which has the advantage of summarising in one parameter (a) the degree of within-cohort redistribution, we add a distortionary element (g).”