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Privatizing Social Security: A Political-Economy Approach

Author

Listed:
  • Razin, Assaf

    (Tel-Aviv U and Cornell U)

  • Sadka, Efraim

    (Tel-Aviv U)

Abstract

The aging of the population shakes the public finance of pay- as-you-go social security systems. We develop a political-economy framework in which this demographic change leads to the downsizing of the social security system, and, as a consequence, to the emergence of supplemental individual retirement programs. Allowing for a one-shot budget deficit, earmarked to accommodate the cost of the social security reforms, is shown to facilitate the political-economy transition from a national to a private pension system.

Suggested Citation

  • Razin, Assaf & Sadka, Efraim, 2004. "Privatizing Social Security: A Political-Economy Approach," Monetary and Economic Studies, Institute for Monetary and Economic Studies, Bank of Japan, vol. 22(S1), pages 127-136, December.
  • Handle: RePEc:ime:imemes:v:22:y:2004:i:s1:p:127-136
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    More about this item

    JEL classification:

    • 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
    • J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making

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