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

40 Pages Posted: 10 Jul 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

Multiple version iconThere are 2 versions of this paper

Date Written: May 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.

Suggested Citation

Mulligan, Casey B. and Sala-i-Martin, Francesc Xavier, Social Security in Theory and Practice (I): Facts and Political Theories (May 1999). NBER Working Paper No. w7118. Available at SSRN: https://ssrn.com/abstract=227338

Casey B. Mulligan (Contact Author)

University of Chicago ( email )

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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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