Marie-Louise Leroux, FRS-FNRS and CORE, Université catholique de Louvain, Voie du Roman Pays, 34, B-1348 Louvain-la-Neuve, Belgium (firstname.lastname@example.org).
The Political Economy of Social Security under Differential Longevity and Voluntary Retirement
Article first published online: 20 JAN 2010
© 2010 Wiley Periodicals, Inc.
Journal of Public Economic Theory
Volume 12, Issue 1, pages 151–170, February 2010
How to Cite
LEROUX, M.-L. (2010), The Political Economy of Social Security under Differential Longevity and Voluntary Retirement. Journal of Public Economic Theory, 12: 151–170. doi: 10.1111/j.1467-9779.2009.01451.x
I would like to thank Helmuth Cremer, Philippe De Donder, and Jean-Marie Lozachmeur for their guidance. I would also like to thank participants at Cesifo Summer Institute in Venice 2007, Workshop on “Longevity and Annuitization”: in particular, Paula Lopes for her discussion, Pierre Pestieau, Grégory Ponthière and Eytan Sheshinski for their comments. I am also grateful to Georges Casamatta, Catherine Bobtcheff, Andrea Amelio, and to three anonymous referees for their helpful comments on this paper.
- Issue published online: 20 JAN 2010
- Article first published online: 20 JAN 2010
- Received September 12, 2007; Accepted April 06, 2009.
This paper studies a model where the existence of a pension system is decided by majority voting. We assume that individuals have the same income but different longevity. Retirement is voluntary and the pension system is characterised by a payroll tax on earnings and a flat pension benefit. Individuals vote only on the tax level. We show that a pension system emerges when there is a majority of long-lived individuals and that voluntary retirement enables to lower the size of the transfers received by the long-lived. A rise in average longevity will also increase the size of the pension system.