Are Aging OECD Welfare States on the Path to the Politics of Gerontocracy? Evidence from 18 Democracies, 1980-2002

Abstract

In the fifteen years since 1990, the average OECD median voter age has increased three times faster than in the preceding thirty years. We use panel data covering the years 1980-2002 to investigate the effects of population aging on both the program size and the benefit generosity of public pensions in 18 OECD countries. Population aging appears to lead to the cutting of smaller slices out of larger cakes: it increases overall pension program spending but decreases the generosity of individual benefits. Controlling for political, institutional and time-period effects, we find that public pension efforts are significantly mediated by welfare regime type and have more fully adopted a retrenchment logic since the late 1980s. It is the politics of double fiscal and electoral straitjackets, not gerontocracy, which reigns supreme in public pension spending today. Population aging is undoubtedly accelerating in most OECD democracies. But contrary to alarmist political economy predictions, these democracies are not yet dominated by a new distributive politics of elderly power.

Keywords: Generational Conflict, Public Policy, Pension Politics, Population Aging, Welfare Retrenchment, Median Voter Models

JEL Classification: H55, D72