Arbeitspapier
Sustaining social security
This paper analyzes the sustainability of intergenerational transfers in politico-economic equilibrium. Embedding electoral competition for the votes of old and young households in the standard Diamond (1965) OLG model, we find that intergenerational transfers naturally arise in a Markov perfect equilibrium, even in the absence of altruism, commitment, or trigger strategies. Not internalizing the negative effects of transfers for future generations, the political process partially resolves the distributive conflict between old and young voters by shifting some of the cost of social security to the unborn. As a consequence, transfers in politico-economic equilibrium are higher than what is socially optimal. Standard functional form assumptions yield closed-form solutions for the politico-economic equilibrium as well as the equilibrium supported by the Ramsey policy. The model predicts population ageing to lead to larger social security systems, but eventually lower benefits per retiree. Under realistic parameter values, it predicts a social-security tax rate close to the actual one, but higher than the Ramsey tax rate. Closed-form solutions for the case with endogenous labor supply, tax distortions, and multiple policy instruments prove the results to be robust.
- Sprache
-
Englisch
- Erschienen in
-
Series: CESifo Working Paper ; No. 1494
- Klassifikation
-
Wirtschaft
Social Security and Public Pensions
Fiscal Policy
- Thema
-
social security
intergenerational transfers
probabilistic voting
Markov perfect equilibrium
saving
labor supply
Soziale Sicherung
Privater Transfer
Optimale Besteuerung
Sparen
Vollkommener Wettbewerb
Theorie
- Ereignis
-
Geistige Schöpfung
- (wer)
-
Gonzalez-Eiras, Martin
Niepelt, Dirk
- Ereignis
-
Veröffentlichung
- (wer)
-
Center for Economic Studies and ifo Institute (CESifo)
- (wo)
-
Munich
- (wann)
-
2005
- Handle
- Letzte Aktualisierung
-
10.03.2025, 11:43 MEZ
Datenpartner
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. Bei Fragen zum Objekt wenden Sie sich bitte an den Datenpartner.
Objekttyp
- Arbeitspapier
Beteiligte
- Gonzalez-Eiras, Martin
- Niepelt, Dirk
- Center for Economic Studies and ifo Institute (CESifo)
Entstanden
- 2005
Ähnliche Objekte (12)
The role of immigration in sustaining the social security system: a political economy approach
Political and economic forces sustaining social security
Enabling and sustaining collaborative innovation
Youth, violence, and sustaining peace
Infrastructure's Role in Sustaining Asia's Growth
Sustaining Philippine Advantage in Business Process Outsourcing
Communicating social security reform
Social Security and Democracy
Social security and longevity
Families and Social Security
Brazilian social security system
Austrian Social Security Database
The role of immigration in sustaining the social security system: a political economy approach
Political and economic forces sustaining social security
Enabling and sustaining collaborative innovation
Youth, violence, and sustaining peace
Infrastructure's Role in Sustaining Asia's Growth
Sustaining Philippine Advantage in Business Process Outsourcing
Communicating social security reform
Social Security and Democracy
Social security and longevity
Families and Social Security
Brazilian social security system
Austrian Social Security Database
The role of immigration in sustaining the social security system: a political economy approach
Political and economic forces sustaining social security
Enabling and sustaining collaborative innovation
Youth, violence, and sustaining peace
Infrastructure's Role in Sustaining Asia's Growth
Sustaining Philippine Advantage in Business Process Outsourcing
Communicating social security reform
Social Security and Democracy
Social security and longevity
Families and Social Security
Brazilian social security system