VOTING ON SOCIAL SECURITY WHEN LABOR SUPPLY IS ENDOGENOUS†

Friedrich Breyer

Economics and Politics, 1994, vol. 6, issue 2, 119-130

Abstract: One of the puzzles in the political economic theory of unfunded pension systems is that middle‐aged voters do not seem to advocate unlimited increases in the level of contributions and benefits if they take this decision to be valid forever. While the previous literature answered this question by pointing at borrowing restrictions, a more convincing explanation rests on the voters’understanding that future social security taxes will adversely affect future labor supply and thus the source from which their own pensions must be financed. This paper analyzes the validity of this explanation for two different types of pension systems, (a) the lump‐sum benefits case, and (b) the case of fairness within cohorts.

Date: 1994
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Persistent link: https://EconPapers.repec.org/RePEc:bla:ecopol:v:6:y:1994:i:2:p:119-130

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