Social Security, Retirement, and the Single-Mindedness of the Electorate
UPF Economics and Business Working Paper No. 686
39 Pages Posted: 29 Sep 2003
There are 2 versions of this paper
Social Security, Retirement, and the Single-Mindedness of the Electorate
Social Security, Retirement, and the Single-Mindedness of the Electorate
Date Written: May 2003
Abstract
We propose a positive theory that is consistent with two important features of social security programs around the world: (1) they redistribute income from young to old and (2) they induce retirement. We construct a voting model that includes a 'political campaign' or 'debate' prior to the election. The model incorporates 'single-mindedness' of the groups that do not work: while the workers divide their political capital between their 'age concerns' and 'occupational concerns', the retired concentrate all their political capital to support their age group. In our model, the elderly end up getting transfers from the government (paid by the young) and distortionary labor income taxes induce the retirement of the elderly. In addition, our model predicts that occupational groups that work more will tend to have more political power. The opposite is true for non-occupational groups (such as the elderly). We provide some evidence that supports these additional predictions. single-mindedness, political theories of Social Security
Keywords: Social Security, retirement, retirement incentives,
JEL Classification: H55
Suggested Citation: Suggested Citation
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