Social Security and Democracy

Casey Mulligan, Ricard Gil and Xavier Sala-i-Martin

No 8958, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Many political economic theories use and emphasize the process of voting in their explanation of the growth of Social Security, government spending, and other public policies. But is there an empirical connection between democracy and Social Security program size or design? Using some new international data sets to produce both country-panel econometric estimates as well as case studies of South American and southern European countries, we find that Social Security policy varies according to economic and demographic factors, but that very different political histories can result in the same Social Security policy. We find little partial effect of democracy on the size of Social Security budgets, on how those budgets are allocated, or how economic and demographic factors affect Social Security. If there is any observed difference, democracies spend a little less of their GDP on Social Security, grow their budgets a bit more slowly, and cap their payroll tax more often, than do economically and demographically similar nondemocracies. Democracies and nondemocracies are equally likely to have benefit formulas inducing retirement and, conditional on GDP per capita, equally likely to induce retirement with a retirement test vs. an earnings test.

JEL-codes: H11 H55 (search for similar items in EconPapers)
Date: 2002-05
Note: AG PE
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (30)

Published as Casey B. Mulligan & Ricard Gil & Xavier X. Sala-i-Martin, 2010. "Social Security and Democracy," The B.E. Journal of Economic Analysis & Policy, Berkeley Electronic Press, vol. 10(1).

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Journal Article: Social Security and Democracy (2010)
Working Paper: Social security and democracy (2002)
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