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The Politics of Pension Reform under Ageing

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  • Theo Leers
  • Lex Meijdam
  • Harrie A. A Verbon

Abstract

In this paper we address the question whether in case of population ageing a transition from an unfunded to a more funded pension scheme is politically feasible in a representative democracy. We consider two parties: a right-wing party which is willing to trade off intragenerational equity against efficiency gains in intergenerational redistribution, and a left-wing party which does not want to adjust the level of intragenerational distribution. We show that, in an economy with an exogenously given interest rate, only a thus defined right-wing government will propose a social-security reform. Moreover, we demonstrate that such a policy proposal may lead to electoral success if it entails an appropriate mix of distributional efficiency and equity.

Suggested Citation

  • Theo Leers & Lex Meijdam & Harrie A. A Verbon, 2001. "The Politics of Pension Reform under Ageing," CESifo Working Paper Series 521, CESifo.
    • Handle: RePEc:ces:ceswps:_521
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    References listed on IDEAS

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    9. Verbon, Harrie, 1993. "Public Pensions: The Role of Public Choice and Expectations," Journal of Population Economics, Springer;European Society for Population Economics, vol. 6(2), pages 123-135, May.
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    12. Homburg, Stefan, 1990. "The Efficiency of Unfunded Pension Schemes," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 146, pages 640-647.
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    Cited by:

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    2. Daniela Danková & Renata Halásková & Ján Šebo, 2022. "Fiscal and redistributive impacts of the introduction of dynamic components in maternity benefits," Equilibrium. Quarterly Journal of Economics and Economic Policy, Institute of Economic Research, vol. 17(1), pages 103-131, March.

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