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Social Security and Democracy

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Author Info
Xavier Sala-i-Martin ()

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Abstract

Many political economic theories use and emphasize the process of voting in their explanation of the growth of Social Security, government spending, and other public policies. But is there an empirical connection between democracy and Social Security program size or design? Using some new international data sets to produce both country-panel econometric estimates as well as case studies of South American and southern European countries, we find that Social Security policy varies according to economic and demographic factors, but that very different political histories can result in the same Social Security policy. We find little partial effect of democracy on the size of Social Security budgets, on how those budgets are allocated, or how economic and demographic factors affect Social Security. If there is any observed difference, democracies spend a little less of their GDP on Social Security, grow their budgets a bit more slowly, and cap their payroll tax more often, than do economically and demographically similar nondemocracies. Democracies and nondemocracies are equally likely to have benefit formulas inducing retirement and, conditional on GDP per capita, equally likely to induce retirement with a retirement test vs. an earnings test.

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Publisher Info
Paper provided by Department of Economics and Business, Universitat Pompeu Fabra in its series Economics Working Papers with number 621.

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Date of creation: Jun 2002
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Handle: RePEc:upf:upfgen:621

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Related research
Keywords: Social Security; democracy; determinants of public spending;

Other versions of this item:

Find related papers by JEL classification:
H0 - Public Economics - - General
H1 - Public Economics - - Structure and Scope of Government
H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Models of Political Processes: Rent-seeking, Elections, Legislatures, and Voting Behavior

References listed on IDEAS
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Full references

Cited by:
(explanations, 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. Casey B. Mulligan & Xavier Sala-i-Martín, 2003. "Social Security, Retirement, and the Single-Mindedness of the Electorate," Economics Working Papers 686, Department of Economics and Business, Universitat Pompeu Fabra. [Downloadable!]
    Other versions:
  2. Casey B. Mulligan & Ricard Gil & Xavier Sala-i-Martin, 2004. "Do Democracies Have Different Public Policies than Nondemocracies?," Journal of Economic Perspectives, American Economic Association, vol. 18(1), pages 51-74, Winter. [Downloadable!] (restricted)
    Other versions:
  3. Casey B. Mulligan & Xavier Sala-i-Martin, 2002. "Social Security in theory and practice wth implications for reform," Discussion Papers 0203-01, Columbia University, Department of Economics. [Downloadable!]
  4. Philippe Aghion & Albero Alesina & Francesco Trebbi, 2002. "Endogenous Political Institutions," Harvard Institute of Economic Research Working Papers 1957, Harvard - Institute of Economic Research. [Downloadable!]
    Other versions:
  5. repec:bep:eapadv:v:4:y:2004:i:1:p:1067-1067 is not listed on IDEAS
  6. Cameron A. Shelton, 2007. "The Aging Population and the Size of the Welfare State: Is There a Puzzle?," Wesleyan Economics Working Papers 2007-001, Wesleyan University, Department of Economics. [Downloadable!]
  7. Aidt, T.S. & Daunton, M. & Dutta, J., 2008. "The Retrenchment Hypothesis and the Extension of the Franchise in England and Wales," Cambridge Working Papers in Economics 0818, Faculty of Economics, University of Cambridge. [Downloadable!]
  8. Casey B. Mulligan & Kevin K. Tsui, 2006. "Political Competitiveness," NBER Working Papers 12653, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  9. Sergio Espuelas Barroso & Margarita Vilar Rodriguez, 2008. "The determinants of social spending in Spain (1880-1960): Is Lindert right?," Working Papers in Economics 209, Universitat de Barcelona. Espai de Recerca en Economia. [Downloadable!]
  10. repec:bep:eapadv:v:4:y:2004:i:1:p:1289-1289 is not listed on IDEAS
  11. Laeven, Luc, 2004. "The political economy of deposit insurance," Policy Research Working Paper Series 3247, The World Bank. [Downloadable!]
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  12. Casey B. Mulligan & Kevin K. Tsui, 2008. "Political Entry, Public Policies, and the Economy," NBER Working Papers 13830, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  13. Cameron A. Shelton, 2007. "The Size and Composition of Government Expenditure," Wesleyan Economics Working Papers 2007-002, Wesleyan University, Department of Economics. [Downloadable!]
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