Working Paper: CEPR ID: DP6993
Authors: Joo Luis Brasil Gondim; Georges Casamatta
Abstract: We assess the political support for parametric reforms of the Pay-As-You-Go pension system following a downward fertility shock. Using a continuous time overlapping generations model, we show that, for a large class of utility functions, the majority of the population favor a cut in pension benefits over an increase in the contribution rate. Our framework also allows us to evaluate the political support for raising the retirement age and to determine how the timing of the different reforms affect their political support.
Keywords: Fertility Shock; Parametric Reforms; Pay-As-You-Go
JEL Codes: D72; H55
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| downward fertility shock (J19) | preference for cutting pension benefits (J32) |
| age (J14) | support for increasing retirement age (J26) |
| delaying reforms (P11) | changes in political support landscape (D72) |
| age (J14) | preference for benefit cuts over time (D15) |
| utility functions (D11) | preference for pension reforms (H55) |