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The political intergenerational welfare state

Monisankar Bishnu () and Min Wang

Journal of Economic Dynamics and Control, 2017, vol. 77, issue C, 93-110

Abstract: Using a three-period overlapping generations economy framework, we characterize an intergenerational welfare state with endogenous education and pension under voting. We show that although politically establishing Pay-As-You-Go (PAYG) social security in isolation in a dynamically efficient economy will always reduce the capital investment and therefore the social welfare as expected, in contrast politically implementing education-pension policy package instead can improve both human and physical capital accumulation and social welfare over laissez faire. However for this the political influence of the old has to be small thus limiting the size of the PAYG social security program.

Keywords: Education; Pension; Probabilistic voting (search for similar items in EconPapers)
JEL-codes: D91 E6 H3 H52 H55 I21 (search for similar items in EconPapers)
Date: 2017
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Working Paper: The Political Intergenerational Welfare State (2014) Downloads
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Handle: RePEc:eee:dyncon:v:77:y:2017:i:c:p:93-110