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Grand Coalitions for Unpopular Reforms: Building a Cross-Party Consensus to Raise the Retirement Age

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  • Martin Hering

Abstract

This article argues that an increase of the retirement age from 65 years to 67 or higher, which is the most unpopular pension reform measure, is politically feasible if the major parties build either a formal or an informal grand coalition. It argues further that institutional rules and agreed standards, especially the goals expressed in relation to pension policy, facilitate the formation of a grand coalition and increase the autonomy of governments vis-à-vis trade unions. Specifically, by restricting key policy instruments for responding to fiscal pressures, they lead political parties to consider the controversial option of raising the retirement age and to engage in a coordinative discourse about the necessity of this change and the limits of other reform options. This argument implies that the success of a retirement age reform does not depend on a negotiated agreement between a government and trade unions. By examining the agenda-setting and decisionmaking processes in Germany from the mid-1990s to 2007, this article shows that governments raise the retirement age only if they face constraints that rule out tax increases and benefit cuts and that they are able to enact even comprehensive retirement age reforms that increase not only the normal age but also the earliest eligibility age for both public and private pensions.

Suggested Citation

  • Martin Hering, 2008. "Grand Coalitions for Unpopular Reforms: Building a Cross-Party Consensus to Raise the Retirement Age," Social and Economic Dimensions of an Aging Population Research Papers 233, McMaster University.
  • Handle: RePEc:mcm:sedapp:233
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    File URL: http://socserv.mcmaster.ca/sedap/p/sedap233.pdf
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    References listed on IDEAS

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    1. Berkel, Barbara & Börsch-Supan, Axel, 2004. "Pension reform in Germany : the impact on retirement decisions," Papers 04-62, Sonderforschungsbreich 504.
    2. Ebbinghaus, Bernhard, 2008. "Reforming Early Retirement in Europe, Japan and the USA," OUP Catalogue, Oxford University Press, number 9780199553396.
    3. Martin Werding, 2007. "Versicherungsmathematisch korrekte Rentenabschläge für die gesetzliche Rentenversicherung," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 60(16), pages 19-32, August.
    4. Barbara Berkel & Axel Börsch-Supan, 2004. "Pension Reform in Germany: The Impact on Retirement Decisions," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 60(3), pages 393-393, September.
    5. Axel Börsch-Supan & Barbara Berkel, 2004. "Pension Reform in Germany: The Impact on Retirement Decisions," MEA discussion paper series 04062, Munich Center for the Economics of Aging (MEA) at the Max Planck Institute for Social Law and Social Policy.
    6. Thai-Thanh Dang & Pablo Antolín & Howard Oxley, 2001. "Fiscal Implications of Ageing: Projections of Age-Related Spending," OECD Economics Department Working Papers 305, OECD Publishing.
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    Cited by:

    1. Kirchgässner, Gebhard, 2011. "Konkordanz, Divided Government, und die Möglichkeit von Reformen," Economics Working Paper Series 1125, University of St. Gallen, School of Economics and Political Science.

    More about this item

    Keywords

    welfare state; pension politics; retirement age; policy paradigms; institutional constraints; blame avoidance;

    JEL classification:

    • D70 - Microeconomics - - Analysis of Collective Decision-Making - - - General
    • H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions

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