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Veto Power and Wealth: Analysis of the Development of the Swiss Old Age Security

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  • Zenker, Christina G.

Abstract

Switzerland was one of the last OECD-countries to introduce a program for old age security – the AHV. For many decades, expenditures both in absolute terms and as a portion of GDP remained low in OECD comparison. In the 1970ies however, expenditures exploded – within 10 years, the expenditures as a percentage of GDP doubled. This article explains this astonishing development by applying the veto player theory. Veto player theory is useful to determine changes in the policy stability. The higher the policy stability, the more difficult it is to move away from the political status quo. The lower the policy stability, the more probable it is that reforms and changes in government programs can be achieved. This article shows that the policy stability was particularly high in the constitution phase (from 1890 to 1947) and the consolidation phase (from 1974 to the present) and low in the phase in between (from 1948 to 1973), when the foundation for the expansion was set.

Suggested Citation

  • Zenker, Christina G., 2009. "Veto Power and Wealth: Analysis of the Development of the Swiss Old Age Security," MPRA Paper 16927, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:16927
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    JEL classification:

    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • D02 - Microeconomics - - General - - - Institutions: Design, Formation, Operations, and Impact
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior

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