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Political viability of intergenerational transfers. An empirical application

Gianko Michailidis () and Concepció Patxot ()

No 2018/370, UB Economics Working Papers from Universitat de Barcelona, Facultat d'Economia i Empresa, UB Economics

Abstract: Public intergenerational transfers (IGTs) may arise because of the failure of private arrangements to provide optimal economic resources for the young and the old. We examine the political sustainability of the system of public IGTs by asking what the outcome would be if the decision per se to reallocate economic resources between generations was put to the vote. By exploiting the particular nature of National Transfer Accounts data – transfers for pensions and education and total public transfers – and the political economy application proposed by Rangel (2003) we show that most developed countries would vote in favor of a joint public education and pension system. Moreover, our results indicate that a system of total public IGTs to the young and elderly would attract substantial political support and, hence, would be politically viable for most countries in the sample.

Keywords: Intergenerational Transfers; Population Ageing; Pay-As-You-Go Financing; National Transfer Accounts; Political Economy. (search for similar items in EconPapers)
JEL-codes: D70 H50 J10 P16 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-age, nep-edu and nep-pol
Date: 2018
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