Demographic Shock and Social Security: A Political Economy Perspective

Georges Casamatta (), Helmuth Cremer and Pierre Pestieau
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Georges Casamatta: LISA - Laboratoire « Lieux, Identités, eSpaces, Activités » (UMR CNRS 6240 LISA) - CNRS - Centre National de la Recherche Scientifique - Università di Corsica Pasquale Paoli [Université de Corse Pascal Paoli]

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Abstract: We assume that individual voters differ not only according to age but also productivity. In the steady state, workers with wages in the intermediate range join the retired persons to form a majority and vote for a positive level of social security. When a shock decreases population growth, entrenched interests can constrain majority voting decisions and prevent reforms in the name of entitlements. We show that from a Rawlsian viewpoint it may be desirable to rely on these entitlements to protect the low wage earners of the transition generations. However, when the possibility of fixing a basic pension is introduced, it constitutes a better instrument than entitlements.

Keywords: Social security; Majority voting; Entitlements; Aging (search for similar items in EconPapers)
Date: 2001-08-01
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Citations: View citations in EconPapers (15)

Published in International Tax and Public Finance, 2001, 8 (4), pp.417-431. ⟨10.1023/A:1011214823251⟩

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Journal Article: Demographic Shock and Social Security: A Political Economy Perspective (2001)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-02520588

DOI: 10.1023/A:1011214823251

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