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Title:On the Political Economy of Social Security and Public Education PDF Logo
Authors:Poutvaara, Panu
Issue Date:2004
Series/Report no.:IZA Discussion paper series 1408
Abstract:This paper analyzes simultaneous voting on the wage tax rate and investment in public education with three overlapping generations and productivity differences inside each cohort. Wage tax revenue finances public education and social security benefits. The presence of productivity differences introduces a time-consistency problem with repeated voting. This can be solved by trigger strategies which do not punish upward deviations in the wage tax rate. If there are multiple equilibria, then higher tax rates are associated with more education. Surprisingly, the median voter may be a young citizen even when cohorts are of the same size.
Subjects:social security
public education
voting
JEL:H55
H52
D72
Document Type:Working Paper
Appears in Collections:IZA Discussion Papers, Forschungsinstitut zur Zukunft der Arbeit (IZA)

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