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Aging, Inequality and Social Security

Author

Listed:
  • Ryo Arawatari

    (Graduate School of Economics, Osaka University)

  • Tetsuo Ono

    (Graduate School of Economics, Osaka University)

Abstract

This paper develops an overlapping-generations model including wage inequality within a generation and intra- and intergenerational resource reallocation via social security. Based on the concept of a stationary Markov perfect equilibrium, the paper focuses on the feedback mechanism between current individuals f decisions on saving and future voting on social security. The paper demonstrates the determination of social security via probabilistic voting and its consequence for consumption inequality within a generation. It is shown that when the elderly are politically powerful, (i) the economy attains an oscillatory path of inequality and social security, and (ii) aging may reduce consumption inequality.

Suggested Citation

  • Ryo Arawatari & Tetsuo Ono, 2008. "Aging, Inequality and Social Security," Discussion Papers in Economics and Business 08-19, Osaka University, Graduate School of Economics.
    • Handle: RePEc:osk:wpaper:0819
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    File URL: http://www2.econ.osaka-u.ac.jp/library/global/dp/0819.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    Aging; Inequality; Social security; Political Economy; Stationary Markov Perfect Equilibrium;
    All these keywords.

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • J10 - Labor and Demographic Economics - - Demographic Economics - - - General

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