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Pensions and Voting Equilibria in an Overlapping Generation Model with Heterogeneous Agents

Géraldine Mahieu and Stephane Rottier ()
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Géraldine Mahieu: UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES) ; Belgian National Fund for Scientific Research (FNRS)

No 1999031, Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) from Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES)

Abstract: We model how a Beveridgean pay-as-you-go pension system may be supported by a majority of heterogeneous voters in a general equilibrium OLG model. The introduction of heterogeneity creates intragenerational transfers among workers which may lead to different optimal taxation rates within young individuals and to a positive taxation rate as outcome of the political choice. We underline the general equilibrium effects of a PAYG pension system on the interest rate, on future wages and therefore on the future level of pensions. We obtain an equilibrium tax rate and pension level that do not depend on population growth rate and on the capital stock.

Keywords: Social Security; Majority Voting (search for similar items in EconPapers)
JEL-codes: D72 E62 H55 (search for similar items in EconPapers)
Pages: 22
Date: 1998-11-01, Revised 1999-11
New Economics Papers: this item is included in nep-pbe
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Persistent link: https://EconPapers.repec.org/RePEc:ctl:louvir:1999031

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