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On the Choice of Public Pensions when Income and Life Expectancy Are Correlated

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  • RAINALD BORCK

Abstract

The paper presents a model where public pensions are determined by majority voting. Voters differ by age and income. Moreover, life expectancy increases with income. Depending on the strength of the link between contributions and benefits, and the relationship between income and life expectancy, individually optimal tax rates may increase or decrease with income. If they decrease, high tax rates are supported by pensioners and poor workers. If they increase with income, the coalition for high tax rates consists of pensioners and rich workers. "Ends against the middle" equilibria are also possible. Copyright 2007 Blackwell Publishing, Inc..

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Bibliographic Info

Article provided by Association for Public Economic Theory in its journal Journal of Public Economic Theory.

Volume (Year): 9 (2007)
Issue (Month): 4 (08)
Pages: 711-725

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Handle: RePEc:bla:jpbect:v:9:y:2007:i:4:p:711-725

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  14. Reil-Held, Anette, 2000. "Einkommen und Sterblichkeit in Deutschland: Leben Reiche länger?," Sonderforschungsbereich 504 Publications 00-14, Sonderforschungsbereich 504, Universität Mannheim & Sonderforschungsbereich 504, University of Mannheim.
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