Arbeitspapier

Why are more redistributive social security systems smaller? : A median voter approach

We suggest a political economy explanation for the stylized fact that intragenerationally more redistributive social security systems are smaller. Our key insight is that linking benefits to past earnings (less redistributiveness) reduces the efficiency cost of social security (due to endogenous labor supply). This encourages voters who benefit from social security to support higher contribution rates in political equilibrium. We test our theory with a numerical analysis of eight European countries. Our simple, but suggestive median voter model performs relatively well in explaining the stylized fact and cross-country differences in social security contribution rates.

Language
Englisch

Bibliographic citation
Series: CESifo Working Paper ; No. 1397

Classification
Wirtschaft
Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
Social Security and Public Pensions
Subject
earnings-related and flat-rate benefits
social security
public pensions
median voter model
Sozialversicherung
Soziale Sicherung
Einkommensumverteilung
Sozialversicherungsbeitrag
Umlageverfahren
Median Voter
Schätzung
EU-Staaten

Event
Geistige Schöpfung
(who)
Koethenbuerger, Marko
Poutvaara, Panu
Profeta, Paola
Event
Veröffentlichung
(who)
Center for Economic Studies and ifo Institute (CESifo)
(where)
Munich
(when)
2005

Handle
Last update
10.03.2025, 11:44 AM CET

Data provider

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Object type

  • Arbeitspapier

Associated

  • Koethenbuerger, Marko
  • Poutvaara, Panu
  • Profeta, Paola
  • Center for Economic Studies and ifo Institute (CESifo)

Time of origin

  • 2005

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