When will the Germans Get Trapped in their Pension System?
AbstractThe upcoming demographic crisis in Germany demands fundamentalreforms of the pension system. In a democracy, reforms are, however, onlyfeasible when they are supported by the majority of the electorate. Todetermine whether the majority is in favor of reforms of the pension system,we calculate for each year the "indifference age" as the age of the cohortwhich is not affected by the reform and the "median age" as the age of thepolitically decisive cohort. Until 2023, the median age is below theindifference age implying that the young have the majority and the reformcan be democratically enforced. After 2023, Germany will be characterizedby a gerontocratic system where the old decide over the young. Only the fearthat the young might emigrate – and perhaps a certain altruistic attitudetowards their own descendants – will prevent the old from exploiting theyoung.
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Bibliographic InfoPaper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 561.
Date of creation: 2001
Date of revision:
demographic crisis; pension reform; political feasibility; median age; indifference age;
Other versions of this item:
- Hans-Werner Sinn & Silke Uebelmesser, 2001. "When Will the Germans Get Trapped in their Pension System?," NBER Working Papers 8503, National Bureau of Economic Research, Inc.
- H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
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