Gerontocracy, retirement, and social security

Casey Mulligan and Xavier Sala-i-Martin

Economics Working Papers from Department of Economics and Business, Universitat Pompeu Fabra

Abstract: Why are the old politically successful? We build a simple interest group model in which political pressure is time-intensive, showing that in the political competitive equilibrium each group lobbies for government policies that lower their own value of time but the old do so to a greater extent and as a result are net gainers from the political process. What distinguishes the elderly from other political groups (and what makes them more succesful) is that they have lower labor productivity and/or that we are all likely to become elderly at some point, while we are relatively unlikely to change gender, race, sexual orientation, or even ocupation, The model has a variety of implications for the design of social security programs, which we test using data from the Social Security Administration. For example, the model predicts that social security programs with retirement incentives are larger and that the old are more "single-minded" in their politics, implications which we verify using cross-country government finance data and cross- country political participation surveys. Finally, we show that the forced savings programs intended to "reform" the social security system may increase the amount of intergenerational redistribution. As a model for evaluating policy reforms, ours has the attractive feature that reforms must be time time consistent from a political point of view rather than a public interest point of view.

Keywords: Social Security; retirement; gerontocracy; lobby; pressure groups (search for similar items in EconPapers)
JEL-codes: H55 J2 J26 (search for similar items in EconPapers)
Date: 1999-04
New Economics Papers: this item is included in nep-cdm, nep-lab, nep-mic and nep-pub
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (68)

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Working Paper: Gerontocracy, Retirement, and Social Security (1999)
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Persistent link: https://EconPapers.repec.org/RePEc:upf:upfgen:383

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