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Clientelism in Social Security

Author

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  • Alvaro Forteza

    (Departmento de Economía, Facultad de Ciencias Sociales, Universidad de la República)

Abstract

Most public pension systems failed to build trust funds, even when it was clear that they were becoming unsustainable in the long run. It is argued in this paper that politicians ruling public pension programs have strong incentives to exhaust the trust funds, distributing benefits among voters to raise their probability of winning elections. Old citizens are among the most responsive voters to pensionary benefits and are thus the likely beneficiaries in this redistributive game. Within each generation, poor voters are more responsive to pensionary benefits than rich voters, and are therefore good targets for redistributive politics as well. Simulation results suggest that these policies may significantly dampen aggregate savings.

Suggested Citation

  • Alvaro Forteza, 2000. "Clientelism in Social Security," Documentos de Trabajo (working papers) 1500, Department of Economics - dECON.
    • Handle: RePEc:ude:wpaper:1500
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    File URL: https://hdl.handle.net/20.500.12008/1926
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    References listed on IDEAS

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    More about this item

    Keywords

    Electoral Competition; Pensions; Political Clients; Probabilistic Voting;
    All these keywords.

    JEL classification:

    • E69 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Other
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions

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