Positive arithmetic of the welfare state

• 成果类型: Article
• 署名作者: Conde-Ruiz, JI; Galasso, V
• 署名单位: Bocconi University
• 刊物名称: JOURNAL OF PUBLIC ECONOMICS
• ISSN/ISSBN: 0047-2727
• DOI: 10.1016/j.jpubeco.2004.06.010
• 发表日期: 2005
• 页码: 933-955
• 关键词: Social Security; income inequality; subgame perfect structure induced equilibrium

摘要

This paper argues that social security enjoys wider political support than other welfare programs because: (i) retirees constitute the most homogeneous voting group, and (ii) the intragenerational redistribution component of social security induces low-income young to support this system. In a dynamically efficient overlapping generation economy with earnings heterogeneity, we show that, for sufficient income inequality and enough elderly in the population, a welfare system composed of a within-cohort redistribution scheme and an unfunded social security system represents the political equilibrium of a two-dimensional majoritarian election. Social security is sustained by retirees and low-income young; while intragenerational redistribution by low-income young. Unlike unidimensional voting model, our model suggests that to assess how changes in inequality affect the welfare state, the income distribution should be decomposed by age groups. (c) 2004 Elsevier B.V. All rights reserved.