EconPapers    
Economics at your fingertips  
 

Political (in)stability of social security reform

Krzysztof Makarski () and Joanna Tyrowicz ()

No 14, GRAPE Working Papers from GRAPE Group for Research in Applied Economics

Abstract: We analyze the political stability social security reforms which introduce a funded pillar (a.k.a. privatizations). We consider an economy populated by overlapping generations, which introduces a funded pillar. This reform is efficient in Kaldor-Hicks sense and has political support. Subsequently, agents vote on abolishing the funded system and replacing it with the pay-as-you-go scheme, i.e. “unprivatizing” the pension system. We show that even if abolishing the system reduces welfare in the long run, the distribution of benefits across cohorts along the transition path implies that “unprivatizing” social security is always politically favored. This suggests that property rights definition over retirement savings may be of crucial importance for determining the stability of retirement systems with a funded pillar.

Keywords: majority voting; pension system reform; welfare (search for similar items in EconPapers)
JEL-codes: H55 D72 C68 E17 E27 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-age, nep-dge, nep-mac, nep-pbe and nep-pol
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
http://grape.org.pl/WP/14_MakarskiTyrowicz_website.pdf (application/pdf)

Related works:
Working Paper: Political (In)Stability of Social Security Reform (2015) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:fme:wpaper:14

Access Statistics for this paper

More papers in GRAPE Working Papers from GRAPE Group for Research in Applied Economics Contact information at EDIRC.
Bibliographic data for series maintained by Jan Hagemejer ().

 
Page updated 2019-02-13
Handle: RePEc:fme:wpaper:14