eprintid: 2950
rev_number: 13
eprint_status: archive
userid: 52
dir: disk0/00/00/29/50
datestamp: 2015-12-02 08:22:13
lastmod: 2015-12-02 08:22:13
status_changed: 2015-12-02 08:22:13
type: monograph
metadata_visibility: show
creators_name: Wen, Xue
creators_id: xue.wen@imtlucca.it
title: A Probabilistic Voting Model of Social Security with Myopic Agents
ispublished: submitted
subjects: HJ
divisions: EIC
full_text_status: none
monograph_type: working_paper
keywords: Keywords: Myopia, Social Security, Probabilistic Voting. JEL Codes: H55, D91, H30
abstract: This paper investigates the political incentives for the design of a Pay-as-you-go public pension system in a probabilistic voting model with both far-sighted and myopic agents. People vote for a payroll tax rate determining the size of the pension system and a Bismarckian factor representing the redistributive degree of the system. The pension system acts as a redistribution mechanism and a commitment device. The far-sighted households prefer a contributive social security system. The myopic households prefer a more redistributive pension system but not necessarily a more generous pension system due to the trade-off between redistribution and efficiency. Office seeking politicians can target the far-sighted and myopic groups by leveraging the generosity and the redistribution degree of the social security system. In the political equilibrium, the payroll tax rate is U-shaped with respect to the Bismarckian factor, which can partially explain the political puzzle that why, in practice, Bismarckian pension systems tend to be associated with a larger pension base.
date: 2015-07
date_type: submitted
institution: IMT Institute for Advanced Studies Lucca
official_url: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2697985
citation:   Wen, Xue  A Probabilistic Voting Model of Social Security with Myopic Agents.  Working Paper       (Submitted)