Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/18761
Authors: 
Koethenbuerger, Marko
Poutvaara, Panu
Profeta, Paola
Year of Publication: 
2005
Series/Report no.: 
CESifo Working Paper 1397
Abstract: 
We suggest a political economy explanation for the stylized fact that intragenerationally more redistributive social security systems are smaller. Our key insight is that linking benefits to past earnings (less redistributiveness) reduces the efficiency cost of social security (due to endogenous labor supply). This encourages voters who benefit from social security to support higher contribution rates in political equilibrium. We test our theory with a numerical analysis of eight European countries. Our simple, but suggestive median voter model performs relatively well in explaining the stylized fact and cross-country differences in social security contribution rates.
Subjects: 
earnings-related and flat-rate benefits
social security
public pensions
median voter model
JEL: 
D72
H55
Document Type: 
Working Paper

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