Social Security, Retirement, and the Single-Mindedness of the Electorate

UPF Economics and Business Working Paper No. 686

39 Pages Posted: 29 Sep 2003

See all articles by Casey B. Mulligan

Casey B. Mulligan

University of Chicago; National Bureau of Economic Research (NBER)

Xavier Sala-i-Martin

Columbia University, Graduate School of Arts and Sciences, Department of Economics

Multiple version iconThere are 2 versions of this paper

Date Written: May 2003

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. single-mindedness, political theories of Social Security

Keywords: Social Security, retirement, retirement incentives,

JEL Classification: H55

Suggested Citation

Mulligan, Casey B. and Sala-i-Martin, Francesc Xavier, Social Security, Retirement, and the Single-Mindedness of the Electorate (May 2003). UPF Economics and Business Working Paper No. 686, Available at SSRN: https://ssrn.com/abstract=430960 or http://dx.doi.org/10.2139/ssrn.430960

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Francesc Xavier Sala-i-Martin

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