Gerontocracy, Retirement, and Social Security

59 Pages Posted: 1 Sep 2000 Last revised: 16 Apr 2008

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

Date Written: May 1999

Abstract

Why are the old politically successful? We build a simple interest group model in which political pressure is time-intensive, showing that in the political competitive equilibrium each group lobbies for government policies that lower their own value of time but that the old do so to a greater extent and as a result are net gainers from the political process. What distinguishes the elderly from other political groups (and what makes them more successful) is that they have lower labor productivity and/or that we are all likely to become elderly at some point, while we are relatively unlikely to change gender, race, sexual orientation, or even occupation. The model has a variety of implications for the design of social security programs, which we test using data from the Social Security Administration. For example, the model predicts that social security programs with retirement incentives are larger and that the old are more single-minded' in their politics, implications which we verify using cross-country government finance data and cross-country political participation surveys. Finally, we show that the forced savings programs intended to reform' the social security system may increase the amount of intergenerational redistribution. As a model for evaluating policy reforms, ours has the attractive feature that reforms must be time consistent from a political point of view rather than a public interest point of view.

Suggested Citation

Mulligan, Casey B. and Sala-i-Martin, Francesc Xavier, Gerontocracy, Retirement, and Social Security (May 1999). NBER Working Paper No. w7117. Available at SSRN: https://ssrn.com/abstract=227337

Casey B. Mulligan (Contact Author)

University of Chicago ( email )

1126 East 59th Street
Chicago, IL 60637
United States
773-702-9017 (Phone)
773-702-8490 (Fax)

National Bureau of Economic Research (NBER)

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Cambridge, MA 02138
United States

Francesc Xavier Sala-i-Martin

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

420 W. 118th Street
New York, NY 10027
United States
212-854-7055 (Phone)

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