Social Security in Theory and Practice (I): Facts and Political Theories

Universitat Pompeu Fabra, Department of Economics Working Paper No. 384

42 Pages Posted: 23 Jun 1999

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: April 23, 1999

Abstract

166 countries have some kind of public old age pension. What economic forces create and sustain old age Social Security as a public program? We document some of the internationally and historically common features of Social Security programs including explicit and implicit taxes on labor supply, pay-as-you-go features, intergenerational redistribution, benefits which are increasing functions of lifetime earnings and not means-tested. We partition theories of Social Security into three groups: "political", "efficiency" and "narrative" theories. We explore three political theories in this paper: the majority rational voting model (with its two versions: "the elderly as the leaders of a winning coalition with the poor" and the "once and for all election" model), the "time-intensive model of political competition" and the "taxpayer protection model". Each of the explanations is compared with the international and historical facts. A companion paper explores the "efficiency" and "narrative" theories, and derives implications of all the theories for replacing the typical pay-as-you-go system with a forced savings plan.

See also the second part of the paper by Casey B. Mulligan and Xavier Sala-i-Martin "Social Security in Theory and Practice (II): Efficiency Theories"

Note: For journal readers: A related paper is available at the URL which follows this abstract. It is written in html. Cut and paste beginning with http:// and ending with the 5-digit number.

JEL Classification: H55

Suggested Citation

Mulligan, Casey B. and Sala-i-Martin, Francesc Xavier, Social Security in Theory and Practice (I): Facts and Political Theories (April 23, 1999). Universitat Pompeu Fabra, Department of Economics Working Paper No. 384. Available at SSRN: https://ssrn.com/abstract=166835 or http://dx.doi.org/10.2139/ssrn.166835

Casey B. Mulligan (Contact Author)

University of Chicago ( email )

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National Bureau of Economic Research (NBER)

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Francesc Xavier Sala-i-Martin

Columbia University, Graduate School of Arts and Sciences, Department of Economics ( email )

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212-854-7055 (Phone)

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