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On the political economy of social security and public education

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  • Panu Poutvaara

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Abstract

This paper analyzes simultaneous voting on the wage tax rate and investment in public education with three overlapping generations and productivity differences inside each cohort. Wage tax revenue finances public education and social security benefits. The presence of productivity differences introduces a time-consistency problem with repeated voting. This can be solved by trigger strategies which do not punish upward deviations in the wage tax rate. If there are multiple equilibria, then higher tax rates are associated with more education. Surprisingly, the median voter may be a young citizen even when cohorts are of the same size.

(This abstract was borrowed from another version of this item.)

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File URL: http://hdl.handle.net/10.1007/s00148-006-0063-1
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Bibliographic Info

Article provided by Springer in its journal Journal of Population Economics.

Volume (Year): 19 (2006)
Issue (Month): 2 (June)
Pages: 345-365

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Handle: RePEc:spr:jopoec:v:19:y:2006:i:2:p:345-365

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Related research

Keywords: Social security; Public education; Voting; H52; H55; D72;

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