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The Spirit of the Welfare State? Adaptation in the Demand for Social Insurance

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  • Martin Ljunge

Abstract

Young generations demand substantially more social insurance than older generations, although program rules have been constant for decades. I postulate a model in which the utility of claiming social insurance benefits depends on older generations’ past behavior. The intertemporal mechanism estimated can account for half of the younger generations’ higher demand for social insurance benefits. Instrumenting for older generations’ behavior using mortality rates reveals an even stronger influence of reference group behavior on individual demand. The analysis suggests that behavioral responses estimated by natural experiments could strongly underestimate the true long-run elasticities relevant for the fiscal sustainability of the welfare state.

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Bibliographic Info

Article provided by University of Chicago Press in its journal Journal of Human Capital.

Volume (Year): 6 (2012)
Issue (Month): 3 ()
Pages: 187 - 223

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Handle: RePEc:ucp:jhucap:doi:10.1086/667723

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Citations

Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. Why the young demand more social insurance than older generations
    by Economic Logician in Economic Logic on 2011-12-28 14:50:00
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Cited by:
  1. Ljunge, Martin, 2013. "Social Capital and the Family: Evidence that Strong Family Ties Cultivate Civic Virtues," Working Paper Series 967, Research Institute of Industrial Economics.
  2. Martin Ljunge, 2012. "Family Ties and Civic Virtues: Evidence on Wilson's "Moral Sense"," Discussion Papers 12-07, University of Copenhagen. Department of Economics.
  3. Martin Ljunge, 2011. "Sick of Taxes? Evidence on the Elasticity of Labor Supply when Workers Are Free to Choose," Discussion Papers 11-27, University of Copenhagen. Department of Economics.
  4. Lucifora, Claudio & Meurs, Dominique, 2012. "Family Values, Social Needs and Preferences for Welfare," IZA Discussion Papers 6977, Institute for the Study of Labor (IZA).

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