Voting on Public Pensions with Hand and Feet: How Young Migrants Try to Escape from Gerontocracy

29 Pages Posted: 14 Aug 2001

See all articles by Alexander Haupt

Alexander Haupt

University of Plymouth - Plymouth Business School; CESifo (Center for Economic Studies and Ifo Institute)

Wolfgang Peters

European University Frankfurt

Date Written: July 2001

Abstract

Aging changes the political power in a democracy in favor of the elder generations. Consequently, the retirees can extend the pay-as-you-go financed pensions. Under free labor mobility like within the EU, the success of gerontocracy, nevertheless, is restricted by migration of the young generations. This connection between political voting on intergenerational redistribution and voting with the feet is analyzed in a two-country model with overlapping generations. We distinguish between the case in which the young generations' migration decision takes its effect on future pensions into account (strategic migration) and the case in which it only reflects differentials in labor income (myopic migration). The paper also pays attention to the implications of common harmonization principles and to the consequences of price discrimination between natives and immigrants.

Keywords: Interregional Competition on Public Pensions, Migration, Labor Mobility, Gerontocracy

JEL Classification: D72, F22, H55

Suggested Citation

Haupt, Alexander and Peters, Wolfgang, Voting on Public Pensions with Hand and Feet: How Young Migrants Try to Escape from Gerontocracy (July 2001). CESifo Working Paper Series No. 523. Available at SSRN: https://ssrn.com/abstract=277369

Alexander Haupt (Contact Author)

University of Plymouth - Plymouth Business School ( email )

Mast House
Plymouth, Devon PL4 8AA
United Kingdom

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

Wolfgang Peters

European University Frankfurt ( email )

Grosse Scharrnstr. 59
Frankfurt (Oder), Brandenburg 15230
Germany

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