On the choice of public pensions when income and life expectancy are correlated

The paper presents a model where public pensions are determined by majority voting. Voters differ by age and income. Moreover, life expectancy increases with income. Depending on the strength of the link between contributions and benefits, and the relationship between income and life expectancy, individually optimal tax rates may increase or decrease with income. If they decrease, high tax rates are supported by pensioners and poor workers. If they increase with income, the coalition for high tax rates consists of pensioners and rich workers. 'Ends against the middle' equilibria are also possible.

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Year of publication:	2003
Authors:	Borck, Rainald
Publisher:	Berlin : Deutsches Institut für Wirtschaftsforschung (DIW)
Subject:	Gesetzliche Rentenversicherung \| Wahlverhalten \| Einkommen \| Sterblichkeit \| Theorie \| Voting \| public pensions \| life expectancy

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Series:	DIW Discussion Papers ; 369
Type of publication:	Book / Working Paper
Type of publication (narrower categories):	Working Paper
Language:	English
Other identifiers:	850975913 [GVK] hdl:10419/18126 [Handle] RePEc:diw:diwwpp:dp369 [RePEc]
Classification:	H55 - Social Security and Public Pensions ; D72 - Economic Models of Political Processes: Rent-Seeking, Elections, Legistures, and Voting Behavior
Source:	EconStor

Persistent link: https://www.econbiz.de/10010260696