IDEAS home Printed from https://ideas.repec.org/a/mhr/finarc/urnsici0015-2218(201109)673_225rtppsw_2.0.tx_2-3.html
   My bibliography  Save this article

Reforming the Pay-As-You-Go Pension System: Who Votes for it? When?

Author

Listed:
  • Georges Casamatta
  • João Luis Brasil Gondim

Abstract

We assess the political support for parametric reforms of the pay-as-you-go pension system following a drop in the fertility rate. Using a continuous-time overlapping-generations model, we argue that reforms that consist in cutting pension benefits or increasing the retirement age are likely to receive strong political support. An increase in the contribution rate has, on the contrary, fewer chances to be approved by the majority of the voters. This framework also allows us to identify the costs and benefits of postponing each type of reform and to determine how the timing of the different reforms affects their political support.

Suggested Citation

  • Georges Casamatta & João Luis Brasil Gondim, 2011. "Reforming the Pay-As-You-Go Pension System: Who Votes for it? When?," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 67(3), pages 225-260, September.
  • Handle: RePEc:mhr:finarc:urn:sici:0015-2218(201109)67:3_225:rtppsw_2.0.tx_2-3
    DOI: 10.1628/001522108X600588
    as

    Download full text from publisher

    File URL: https://www.mohrsiebeck.com/en/article/reforming-the-pay-as-you-go-pension-system-who-votes-for-it-when-101628001522111x600588
    Download Restriction: Fulltext access is included for subscribers to the printed version.

    File URL: https://libkey.io/10.1628/001522108X600588?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
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Michele BOLDRIN & Mariacristina DE NARDI & Larry E. JONES, 2015. "Fertility and Social Security," JODE - Journal of Demographic Economics, Cambridge University Press, vol. 81(3), pages 261-299, September.
    2. Georges Casamatta & Helmuth Cremer & Pierre Pestieau, 2000. "The Political Economy of Social Security," Scandinavian Journal of Economics, Wiley Blackwell, vol. 102(3), pages 503-522, September.
    3. 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.
    4. Michele Boldrin & Aldo Rustichini, 2000. "Political Equilibria with Social Security," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 3(1), pages 41-78, January.
    5. Friedrich Breyer & Klaus Stolte, 2001. "Demographic change, endogenous labor supply and the political feasibility of pension reform," Journal of Population Economics, Springer;European Society for Population Economics, vol. 14(3), pages 409-424.
    6. Juan C. Conesa & Dirk Krueger, 1999. "Social Security Reform with Heterogeneous Agents," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 2(4), pages 757-795, October.
    7. repec:bla:scandj:v:102:y:2000:i:3:p:503-22 is not listed on IDEAS
    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. Yueqiang Zhao & Manying Bai & Yali Liu & Junzhang Hao, 2017. "Quantitative Analyses of Transition Pension Liabilities and Solvency Sustainability in China," Sustainability, MDPI, vol. 9(12), pages 1-16, December.
    2. Benjamin Bittschi & Berthold U. Wigger, 2019. "On the Political Feasibility of Increasing the Legal Retirement Age," CESifo Working Paper Series 7492, CESifo.

    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. Elizabeth Caucutt & Thomas Cooley & Nezih Guner, 2013. "The farm, the city, and the emergence of social security," Journal of Economic Growth, Springer, vol. 18(1), pages 1-32, March.
    2. Bernard M.S. van Praag & Pedro Cardoso, 2003. "The Mix Between Pay-as-you-go and Funded Pensions and What Demography Has to Do with it," CESifo Working Paper Series 865, CESifo.
    3. 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.
    4. 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.
    5. Hollanders, D.A. & Koster, F., 2012. "The Graying of the Median Voter," Discussion Paper 2012-061, Tilburg University, Center for Economic Research.
    6. 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.
    7. 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).
    8. Hollanders, D.A. & Koster, F., 2012. "The Graying of the Median Voter," Other publications TiSEM e94711e6-6bd1-4fdb-9c78-4, Tilburg University, School of Economics and Management.
    9. Ryo Arawatari & Tetsuo Ono, 2011. "Old-age Social Security vs. Forward Intergenerational Public Goods Provision," Discussion Papers in Economics and Business 11-26-Rev.2, Osaka University, Graduate School of Economics, revised Aug 2013.
    10. Panu Poutvaara, 2006. "On the political economy of social security and public education," Journal of Population Economics, Springer;European Society for Population Economics, vol. 19(2), pages 345-365, June.
    11. Gianko Michailidis & Concepció Patxot & Meritxell Solé, 2019. "Do pensions foster education? An empirical perspective," Applied Economics, Taylor & Francis Journals, vol. 51(38), pages 4127-4150, August.
    12. Simonovits, András, 2003. "Öregedő népesség, medián választó és a jóléti állam mérete [Ageing population, the median voter and the size of the welfare state]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(10), pages 835-854.
    13. Gonzales-Eiras, Martín & Niepelt, Dirk, 2004. "Sustaining Social Security," Seminar Papers 731, Stockholm University, Institute for International Economic Studies.
    14. Beetsma, Roel & Komada, Oliwia & Makarski, Krzysztof & Tyrowicz, Joanna, 2021. "The political (in)stability of funded social security," Journal of Economic Dynamics and Control, Elsevier, vol. 133(C).
    15. Gabrielle Demange, 2005. "On sustainable pay as you go systems," PSE Working Papers halshs-00590859, HAL.
    16. 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.
    17. Mahieu, Géraldine & Rottier, Stéphane, 1998. "Pensions and Voting Equilibria in an Overlapping Generation Model with Heterogeneous Agents," LIDAM Discussion Papers IRES 1999031, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES), revised 00 Nov 1999.
    18. Simonovits, Andras, 2007. "Can population ageing imply a smaller welfare state?," European Journal of Political Economy, Elsevier, vol. 23(2), pages 534-541, June.
    19. Jorge Soares, 2012. "Social Security: Universal Versus Earnings-dependent Benefits," Economica, London School of Economics and Political Science, vol. 79(316), pages 611-640, October.
    20. Marko Koethenbuerger & Panu Poutvaara & Paola Profeta, 2008. "Why are more redistributive social security systems smaller? A median voter approach," Oxford Economic Papers, Oxford University Press, vol. 60(2), pages 275-292, April.

    More about this item

    Keywords

    pay-as-you-go; parametric reforms; fertility shock;
    All these keywords.

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions

    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:mhr:finarc:urn:sici:0015-2218(201109)67:3_225:rtppsw_2.0.tx_2-3. 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: Thomas Wolpert (email available below). General contact details of provider: https://www.mohrsiebeck.com/fa .

    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.