Working Paper: NBER ID: w9278
Authors: Assaf Razin; Efraim Sadka
Abstract: The aging of the population shakes the confidence in the economic viability of pay-as-you-go social security systems. We demonstrate how in a political-economy framework the shaken cofidence leads to the downsizing of the social security-system, and to the emergence of supplemental individual retirement programs. Lifting the Stability-Pact type ceiling on fiscal deficits is shown to facilitate the transition from a national to a private pension system, through an endogenously determined shift in the median voter.
Keywords: No keywords provided
JEL Codes: H0
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Aging population (J11) | Decrease in confidence of the young generation (E32) |
| Decrease in confidence of the young generation (E32) | Scaling down of pay-as-you-go system (H55) |
| Lifting the ceiling on fiscal deficits (E62) | Transition to private pension system (H55) |
| Fiscal policy changes (E62) | Pension system reforms (H55) |