IDEAS home Printed from https://ideas.repec.org/a/bla/jpbect/v12y2010i1p151-170.html
   My bibliography  Save this article

The Political Economy of Social Security under Differential Longevity and Voluntary Retirement

Author

Listed:
  • MARIE‐LOUISE LEROUX

Abstract

This paper studies a model where the existence of a pension system is decided by majority voting. We assume that individuals have the same income but different longevity. Retirement is voluntary and the pension system is characterised by a payroll tax on earnings and a flat pension benefit. Individuals vote only on the tax level. We show that a pension system emerges when there is a majority of long‐lived individuals and that voluntary retirement enables to lower the size of the transfers received by the long‐lived. A rise in average longevity will also increase the size of the pension system.

Suggested Citation

  • Marie‐Louise Leroux, 2010. "The Political Economy of Social Security under Differential Longevity and Voluntary Retirement," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 12(1), pages 151-170, February.
    • Handle: RePEc:bla:jpbect:v:12:y:2010:i:1:p:151-170
    DOI: 10.1111/j.1467-9779.2009.01451.x
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/j.1467-9779.2009.01451.x
    Download Restriction: no
    File URL: https://libkey.io/10.1111/j.1467-9779.2009.01451.x?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Georges Casamatta & Helmuth Cremer & Pierre Pestieau, 2005. "Voting on Pensions with Endogenous Retirement Age," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 12(1), pages 7-28, January.
    2. Eytan Sheshinski, 2007. "Introduction to The Economic Theory of Annuities," Introductory Chapters, in: The Economic Theory of Annuities, Princeton University Press.
    3. Helmuth Cremer & Jean‐Marie Lozachmeur & Pierre Pestieau, 2008. "Social Security And Retirement Decision: A Positive And Normative Approach," Journal of Economic Surveys, Wiley Blackwell, vol. 22(2), pages 213-233, April.
    4. Jeffrey B. Liebman, 2002. "Redistribution in the Current U.S. Social Security System," NBER Chapters, in: The Distributional Aspects of Social Security and Social Security Reform, pages 11-48, National Bureau of Economic Research, Inc.
    5. Georges Casamatta & Helmuth Cremer & Pierre Pestieau, 2006. "Is there a Political Support for the Double Burden on Prolonged Activity?," Economics of Governance, Springer, vol. 7(2), pages 143-154, May.
    6. Sheshinski, Eytan, 1978. "A model of social security and retirement decisions," Journal of Public Economics, Elsevier, vol. 10(3), pages 337-360, December.
    7. Browning, Edgar K, 1975. "Why the Social Insurance Budget Is Too Large in a Democracy," Economic Inquiry, Western Economic Association International, vol. 13(3), pages 373-388, September.
    8. Eytan Sheshinski, 2007. "The Economic Theory of Annuities," Economics Books, Princeton University Press, edition 1, volume 1, number 8536.
    9. Rainald Borck, 2007. "On the Choice of Public Pensions when Income and Life Expectancy Are Correlated," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 9(4), pages 711-725, August.
    10. Coronado Julia Lynn & Fullerton Don & Glass Thomas, 2011. "The Progressivity of Social Security," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 11(1), pages 1-45, November.
    11. Gans, Joshua S. & Smart, Michael, 1996. "Majority voting with single-crossing preferences," Journal of Public Economics, Elsevier, vol. 59(2), pages 219-237, February.
    12. Juan Lacomba & Francisco Lagos, 2007. "Political election on legal retirement age," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 29(1), pages 1-17, July.
    13. Vincent P. Crawford & David M. Lilien, 1981. "Social Security and the Retirement Decision," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 96(3), pages 505-529.
    14. Galasso, Vincenzo & Profeta, Paola, 2002. "The political economy of social security: a survey," European Journal of Political Economy, Elsevier, vol. 18(1), pages 1-29, March.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. M.‐L. Leroux & P. Pestieau, 2014. "Social Security and Family Support," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 47(1), pages 115-143, February.
    2. Leroux, Marie-Louise & Pestieau, Pierre & Racionero, María, 2011. "Voting on pensions: Sex and marriage," European Journal of Political Economy, Elsevier, vol. 27(2), pages 281-296, June.
    3. Neugart, Michael & Kemmerling, Achim, 2015. "The emergence of redistributive pensions in the developing world," VfS Annual Conference 2015 (Muenster): Economic Development - Theory and Policy 112884, Verein für Socialpolitik / German Economic Association.
    4. Helmuth Cremer & Philippe Donder, 2016. "Life Expectancy Heterogeneity and the Political Support for Collective Annuities," Scandinavian Journal of Economics, Wiley Blackwell, vol. 118(3), pages 594-615, July.
    5. Georges Casamatta & L. Batté, 2016. "The Political Economy of Population Aging," Post-Print hal-02520521, HAL.
    6. Casamatta, G. & Batté, L., 2016. "The Political Economy of Population Aging," Handbook of the Economics of Population Aging, in: Piggott, John & Woodland, Alan (ed.), Handbook of the Economics of Population Aging, edition 1, volume 1, chapter 0, pages 381-444, Elsevier.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Casamatta, G. & Batté, L., 2016. "The Political Economy of Population Aging," Handbook of the Economics of Population Aging, in: Piggott, John & Woodland, Alan (ed.), Handbook of the Economics of Population Aging, edition 1, volume 1, chapter 0, pages 381-444, Elsevier.
    2. Georges Casamatta & L. Batté, 2016. "The Political Economy of Population Aging," Post-Print hal-02520521, HAL.
    3. Georges Casamatta & Helmuth Cremer & Pierre Pestieau, 2005. "Voting on Pensions with Endogenous Retirement Age," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 12(1), pages 7-28, January.
    4. Leroux, Marie-Louise & Pestieau, Pierre & Racionero, María, 2011. "Voting on pensions: Sex and marriage," European Journal of Political Economy, Elsevier, vol. 27(2), pages 281-296, June.
    5. Ryo Arawatari & Tetsuo Ono, 2010. "Retirement and Social Security: A Political Economy Perspective," Discussion Papers in Economics and Business 10-04-Rev, Osaka University, Graduate School of Economics.
    6. Galasso, Vincenzo, 2008. "Postponing retirement: the political effect of aging," Journal of Public Economics, Elsevier, vol. 92(10-11), pages 2157-2169, October.
    7. Enrique Fatás & Juan A. Lacomba & Francisco M. Lagos & Ana I. Moro, 2008. "Experimental tests on consumption, savings and pensions," ThE Papers 08/14, Department of Economic Theory and Economic History of the University of Granada..
    8. Juan Lacomba & Francisco Lagos, 2010. "Postponing the legal retirement age," SERIEs: Journal of the Spanish Economic Association, Springer;Spanish Economic Association, vol. 1(3), pages 357-369, July.
    9. Casamatta, Georges & Brasil Gondim, João Luis, 2008. "Voting on Parametric Reforms of the Pay-As-You-Go Pension System," CEPR Discussion Papers 6993, C.E.P.R. Discussion Papers.
    10. Casamatta, Georges & Gondim, Joao Luis, 2009. "Reforming the Pay-As-You-Go Pension System: Who Votes for it ? When?," TSE Working Papers 09-104, Toulouse School of Economics (TSE).
    11. Tim Krieger & Christine Meemann & Stefan Traub, 2022. "Inequality, Life Expectancy, and the Intragenerational Redistribution Puzzle - Some Experimental Evidence," CESifo Working Paper Series 9677, CESifo.
    12. Ryo Arawatari & Tetsuo Ono, 2011. "Old-age Social Security vs. Forward Intergenerational Public Goods Provision," Discussion Papers in Economics and Business 11-26-Rev, Osaka University, Graduate School of Economics, revised Apr 2012.
    13. M.-L. Leroux & P. Pestieau, 2012. "The political economy of derived pension rights," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 19(5), pages 753-776, October.
    14. M.L. Leroux & P. Pestieau, 2014. "Social Security and Family Support," Canadian Journal of Economics, Canadian Economics Association, vol. 47(1), pages 115-143, February.
    15. Juan A. Lacomba & Francisco M. Lagos, 2009. "Reforming the retirement scheme: Flexible retirement vs. Legal retirement age," ThE Papers 09/01, Department of Economic Theory and Economic History of the University of Granada..
    16. Matteo Bassi, 2008. "An Egg Today and a Chicken Tomorrow: A Model of Social Security with Quasi-Hyperbolic Discounting," CSEF Working Papers 205, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
    17. Helmuth Cremer & Philippe Donder, 2016. "Life Expectancy Heterogeneity and the Political Support for Collective Annuities," Scandinavian Journal of Economics, Wiley Blackwell, vol. 118(3), pages 594-615, July.
    18. Ryo Arawatari & Tetsuo Ono, 2011. "Retirement and social security: the roles of self-fulfilling expectations and educational investments," Economics of Governance, Springer, vol. 12(4), pages 353-383, December.
    19. Juan Lacomba & Francisco Lagos, 2009. "Defined contribution plan vs. defined benefits plan: reforming the legal retirement age," Journal of Economic Policy Reform, Taylor and Francis Journals, vol. 12(1), pages 1-11.
    20. Feldstein, Martin & Liebman, Jeffrey B., 2002. "Social security," Handbook of Public Economics, in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 4, chapter 32, pages 2245-2324, Elsevier.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:jpbect:v:12:y:2010:i:1:p:151-170. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: https://edirc.repec.org/data/apettea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.