SFB 303 Discussion Paper No. A - 279
Author: Weizsäcker, Robert K. von
Title: Population Aging and Social Security: A Politico-Economic Model of
State Pension Financing
Abstract: The present paper attempts to provide a positive,
politico-economic explanation of actual social security
policies. A theoretical framework is devised which integrates
individual utility maximization and governmental maximization
of expected political support. Individual support depends on
how net economic benefit from a pay-as-you-go financed state
pension scheme is translated into a probability of voting for
the government. The relation between net economic positions,
public policy parameters, and voting probabilities is made
explicit by referring to the logit model of qualitative choice.
The analysis is set in an overlapping generations framework.
Optimal state pension policies are characterized, relating such
diverse factors as population aging, political power
distribution, social solidarity, and income taxation.
Creation-Date: revised: July 1990
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