Political Equilibria with Social Security

被引:70
作者
Boldrin, Michele [1 ,2 ]
Rustichini, Aldo [3 ]
机构
[1] Univ Minnesota, Minneapolis, MN 55455 USA
[2] CEPR, London, England
[3] Boston Univ, Boston, MA 02215 USA
关键词
overlapping generations; political economy; social security systems; taxation;
D O I
10.1006/redy.1999.0072
中图分类号
F [经济];
学科分类号
02 ;
摘要
We model pay-as-you-go social security systems as the outcome of majority voting within a overlapping generations model with production. When voting, individuals make two choices, pay the elderly their pensions or default, which amount to promise themselves next period. Under general circumstances, there exist equilibria where pensions are voted into existence and maintained. Our analysis uncovers two reasons for this. The traditional one relies on intergenerational trade and occurs at inefficient equilibria. A second reason relies on the monopoly power of the median voter. It occurs when a reduction in current saving induces a large enough increase in future return on capital to compensate for the negative effect of the tax. We characterize the steady state and dynamic properties of these equilibria and study their welfare properties. (C) 2000 Academic Press
引用
收藏
页码:41 / 78
页数:38
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