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The Politics of Pension Reform under Ageing

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Author Info
Theo Leers
Lex Meijdam
Harrie A. A Verbon ()

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Abstract

In this paper we address the question whether in case of population ageing a transition from an unfunded to a more funded pension scheme is politically feasible in a representative democracy. We consider two parties: a right-wing party which is willing to trade off intragenerational equity against efficiency gains in intergenerational redistribution, and a left-wing party which does not want to adjust the level of intragenerational distribution. We show that, in an economy with an exogenously given interest rate, only a thus defined right-wing government will propose a social-security reform. Moreover, we demonstrate that such a policy proposal may lead to electoral success if it entails an appropriate mix of distributional efficiency and equity.

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Publisher Info
Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number CESifo Working Paper No. 521.

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Date of creation: 2001
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Handle: RePEc:ces:ceswps:_521

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Related research
Keywords: Ageing; overlapping generations; pensions;

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Find related papers by JEL classification:
H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

  1. Feldstein, Martin, 1996. "The Missing Piece in Policy Analysis: Social Security Reform," American Economic Review, American Economic Association, vol. 86(2), pages 1-14, May.
    Other versions:
  2. Coughlin, Peter J & Mueller, Dennis C & Murrell, Peter, 1990. "Electoral Politics, Interest Groups, and the Size of Government," Economic Inquiry, Oxford University Press, vol. 28(4), pages 682-705, October.
  3. Hettich, Walter & Winer, Stanley L, 1988. "Economic and Political Foundations of Tax Structure," American Economic Review, American Economic Association, vol. 78(4), pages 701-12, September. [Downloadable!] (restricted)
  4. Grossman, Gene M & Helpman, Elhanan, 1994. "Protection for Sale," American Economic Review, American Economic Association, vol. 84(4), pages 833-50, September. [Downloadable!] (restricted)
    Other versions:
  5. Bernheim, B Douglas, 1989. "Intergenerational Altruism, Dynastic Equilibria and Social Welfare," Review of Economic Studies, Blackwell Publishing, vol. 56(1), pages 119-28, January. [Downloadable!] (restricted)
  6. Judd, Kenneth L., 1982. "An alternative to steady-state comparisons in perfect foresight models," Economics Letters, Elsevier, vol. 10(1-2), pages 55-59. [Downloadable!] (restricted)
  7. Gartner, Manfred, 1994. "Democracy, elections, and macroeconomic policy: Two decades of progress," European Journal of Political Economy, Elsevier, vol. 10(1), pages 85-109, May. [Downloadable!] (restricted)
  8. Groezen, B. van & Leers, T. & Meijdam, L., 2000. "Family size, looming demographic changes and the efficiency of social security reform," Discussion Paper 27, Tilburg University, Center for Economic Research. [Downloadable!]
  9. Blanchard, Olivier Jean & Kahn, Charles M, 1980. "The Solution of Linear Difference Models under Rational Expectations," Econometrica, Econometric Society, vol. 48(5), pages 1305-11, July. [Downloadable!] (restricted)
  10. Meijdam, Lex & van de Ven, Martijn & Verbon, Harrie A. A., 1996. "The dynamics of government debt," European Journal of Political Economy, Elsevier, vol. 12(1), pages 67-90, April. [Downloadable!] (restricted)
  11. Verbon, Harrie, 1993. "Public Pensions: The Role of Public Choice and Expectations," Journal of Population Economics, Springer, vol. 6(2), pages 123-35, May.
  12. Becker, Gary S, 1983. "A Theory of Competition among Pressure Groups for Political Influence," The Quarterly Journal of Economics, MIT Press, vol. 98(3), pages 371-400, August. [Downloadable!] (restricted)
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Cited by:
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  1. Alessandra Casarico & Carlo Devillanova, 2003. "Capital-skill Complementarity and the Redistributive Effects of Social Security Reform," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
  2. Casarico, Alessandra & Devillanova, Carlo, 2003. "Capital-Skill Complementarity and the Redistributive Effects of Social Security Reform," CEPR Discussion Papers 3773, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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