Social Security in Theory and Practice (I): Facts and Political Theories

Casey Mulligan and Xavier Sala-i-Martin

No 7118, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: 166 countries have some kind of public old age pension. What economic forces create and sustain old age Social Security as a public program? We document some of the internationally and historically common features of Social Security programs including explicit and implicit taxes on labor supply, pay-as-you-go features, intergenerational redistribution, benefits which are increasing functions of lifetime earnings and not means-tested. We partition theories of Social Security into three groups: political', efficiency' and narrative' theories. We explore three political theories in this paper: the majority rational voting model (with its two versions: the elderly as the leaders of a winning coalition with the poor' and the once and for all election' model), the time-intensive model of political competition' and the taxpayer protection model'. Each of the explanations is compared with the international and historical facts. A companion paper explores the efficiency' and narrative' theories and derives implications of all the theories for replacing the typical pay-as-you-go system with a forced savings plan.

JEL-codes: D78 H55 (search for similar items in EconPapers)
Date: 1999-05
New Economics Papers: this item is included in nep-cdm, nep-his, nep-lab, nep-mic, nep-pbe and nep-pub
Note: AG PE
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (45)

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Working Paper: Social security in theory and practice (I): Facts and political theories (1999)
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