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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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  • 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.
  • Handle: RePEc:upf:upfgen:686
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    Cited by:

    1. Andersen, Torben M., 2008. "Increasing longevity and social security reforms--A legislative procedure approach," Journal of Public Economics, Elsevier, vol. 92(3-4), pages 633-646, April.
    2. Emanuele, Canegrati, 2007. "A Contribution to the Positive Theory of Direct Taxation," MPRA Paper 6117, University Library of Munich, Germany.
    3. canegrati, emanuele, 2006. "The Single-Mindedness Theory: Micro-foundation and Applications to Social Security Systems," MPRA Paper 1223, University Library of Munich, Germany.
    4. Torben Andersen, 2006. "Increasing Longevity and Social Security Reforms," CESifo Working Paper Series 1789, CESifo Group Munich.
    5. Canegrati, Emanuele, 2007. "The Single-Mindedness of Labor Unions: Theory and Empirical Evidence," MPRA Paper 1398, University Library of Munich, Germany.
    6. Audinga Baltrunaite & Alessandra Casarico & Paola Profeta, 2014. "Spill-over Effects of Affirmative Action: Political Representation and the Power of the Elderly," CESifo Working Paper Series 4955, CESifo Group Munich.
    7. 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.
    8. canegrati, emanuele, 2007. "The single-mindedness of labor unions when transfers are not Lump-Sum," MPRA Paper 2320, University Library of Munich, Germany.
    9. canegrati, emanuele, 2006. "The Single Mindedness Theory of Labor Unions," MPRA Paper 1224, University Library of Munich, Germany.
    10. 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.
    11. Canegrati, Emanuele, 2007. "On redistribution effects of public debt amongst single-minded generations," MPRA Paper 2254, University Library of Munich, Germany.
    12. Emanuele, Canegrati, 2007. "A Single-Mindedness model with n generations," MPRA Paper 2548, University Library of Munich, Germany.
    13. 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.

    More about this item

    Keywords

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

    JEL classification:

    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions

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