The Spirit of the Welfare State? Adaptation in the Demand for Social Insurance

Journal of Human Capital, Fall 2012, vol. 6 no. 3 pp. 187-223.

46 Pages Posted: 3 Dec 2011 Last revised: 14 Jun 2013

See all articles by Martin Ljunge

Martin Ljunge

Research Institute of Industrial Economics (IFN)

Date Written: November 3, 2011

Abstract

Young generations demand substantially more social insurance than older generations, although program rules have been constant for decades. I postulate a model where the utility of taking up social insurance benefits depends on the past behavior of older generations. The model is estimated with individual panel data. The intertemporal mechanism estimated can account for half of the younger generations’ higher demand for social insurance benefits. The influence of older generations’ behavior remains when instrumenting using mortality rates, which makes a compelling case for a causal intertemporal influence on individual demand.

Keywords: social insurance, adaptation, role models

JEL Classification: H31, I18, J22, Z13

Suggested Citation

Ljunge, Martin, The Spirit of the Welfare State? Adaptation in the Demand for Social Insurance (November 3, 2011). Journal of Human Capital, Fall 2012, vol. 6 no. 3 pp. 187-223., Available at SSRN: https://ssrn.com/abstract=1967413 or http://dx.doi.org/10.2139/ssrn.1967413

Martin Ljunge (Contact Author)

Research Institute of Industrial Economics (IFN) ( email )

Box 55665
Grevgatan 34, 2nd floor
Stockholm, SE-102 15
Sweden

HOME PAGE: http://https://sites.google.com/site/martinljunge/

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