Internationally Common Features of Public Old-Age Pensions, and Their Implications for Models of the Public Sector

Casey Mulligan and Xavier Sala-i-Martin

The B.E. Journal of Economic Analysis & Policy, 2004, vol. 4, issue 1, 1-37

Abstract: What does the international history of old-age Social Security program design say about the forces creating and sustaining it as a public program? First, because many program features are internationally common, and/or explained by country characteristics, SS may emerge and grow due to systematic political and economic forces. Second, some observations suggest that political forces are important: (a) SS redistributes from young to old, even when the elderly consume as much or more than do the young, and (b) benefits increase with lifetime earnings and are hardly means-tested. On the other hand, it is not simply a matter of the elderly out-voting the young, because: (c) benefit formulas induce retirement, especially in the countries with the largest SS budgets, and (d) similar public pension programs emerge and grow under very different political regimes. We explain how empirical observations, and some currently unanswered empirical questions, relate to various public pension theories.

Date: 2004
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DOI: 10.2202/1538-0637.1067

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