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Social security, retirement, and the single-mindedness of the electorate

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Abstract

We propose a positive theory that is consistent with two important features of social security programs around the world: (1) they redistribute income from young to old and (2) they induce retirement. We construct a voting model that includes a “political campaign” or “debate” prior to the election. The model incorporates “single-mindedness” of the groups that do not work: while the workers divide their political capital between their “age concerns” and “occupational concerns”, the retired concentrate all their political capital to support their age group. In our model, the elderly end up getting transfers from the government (paid by the young) and distortionary labor income taxes induce the retirement of the elderly. In addition, our model predicts that occupational groups that work more will tend to have more political power. The opposite is true for non-occupational groups (such as the elderly). We provide some evidence that supports these additional predictions.

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Bibliographic Info

Paper provided by Department of Economics and Business, Universitat Pompeu Fabra in its series Economics Working Papers with number 686.

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Date of creation: May 2003
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Handle: RePEc:upf:upfgen:686

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Web page: http://www.econ.upf.edu/

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Keywords: Social Security; retirement; retirement incentives; single-mindedness; political theories of Social Security;

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Citations

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Cited by:
  1. canegrati, emanuele, 2006. "The Single-Mindedness Theory: Micro-foundation and Applications to Social Security Systems," MPRA Paper 1223, University Library of Munich, Germany.
  2. Torben Andersen, 2006. "Increasing Longevity and Social Security Reforms," CESifo Working Paper Series 1789, CESifo Group Munich.
  3. Slavov Sita Nataraj, 2006. "Age Bias in Fiscal Policy: Why Does the Political Process Favor the Elderly?," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 6(1), pages 1-37, October.
  4. Emanuele, Canegrati, 2007. "A Contribution to the Positive Theory of Direct Taxation," MPRA Paper 6117, University Library of Munich, Germany.
  5. Canegrati, Emanuele, 2007. "The Single-Mindedness of Labor Unions: Theory and Empirical Evidence," MPRA Paper 1398, University Library of Munich, Germany.
  6. canegrati, emanuele, 2007. "The single-mindedness of labor unions when transfers are not Lump-Sum," MPRA Paper 2320, University Library of Munich, Germany.
  7. canegrati, emanuele, 2006. "The Single Mindedness Theory of Labor Unions," MPRA Paper 1224, University Library of Munich, Germany.
  8. Sørensen, Rune J., 2013. "Does aging affect preferences for welfare spending? A study of peoples' spending preferences in 22 countries, 1985–2006," European Journal of Political Economy, Elsevier, vol. 29(C), pages 259-271.
  9. Emanuele, Canegrati, 2007. "A Single-Mindedness model with n generations," MPRA Paper 2548, University Library of Munich, Germany.
  10. Rattsø, Jørn & Sørensen, Rune J., 2010. "Grey power and public budgets: Family altruism helps children, but not the elderly," European Journal of Political Economy, Elsevier, vol. 26(2), pages 222-234, June.
  11. Canegrati, Emanuele, 2007. "On redistribution effects of public debt amongst single-minded generations," MPRA Paper 2254, University Library of Munich, Germany.

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