Pensions and Voting Equilibria in an Overlapping Generation Model with Heterogeneous Agents
AbstractWe model how a Beveridgean pay-as-you-go pension system may be supported by a majority of heterogeneous voters in a general equilibrium OLG model. The introduction of heterogeneity creates intragenerational transfers among workers which may lead to different optimal taxation rates within young individuals and to a positive taxation rate as outcome of the political choice. We underline the general equilibrium effects of a PAYG pension system on the interest rate, on future wages and therefore on the future level of pensions. We obtain an equilibrium tax rate and pension level that do not depend on population growth rate and on the capital stock.
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Bibliographic InfoPaper provided by Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES) in its series Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) with number 1999031.
Date of creation: 01 Nov 1998
Date of revision: 00 Nov 1999
Social Security; Majority Voting;
Find related papers by JEL classification:
- D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
- E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
- H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
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