Life expectancy heterogeneity and the political support for collective annuities

Helmuth Cremer and Philippe De Donder

No 827, IDEI Working Papers from Institut d'Économie Industrielle (IDEI), Toulouse

Abstract: Individuals, differing in productivity and life expectancy, vote over the size and type of a collective annuity. Its type is represented by the fraction of the contributive (Bismarckian) component (based on the worker's past earnings) as opposed to the non-contributive (Beveridgean) part (based on average contribution). The equilibrium collective annuity is either a large mostly Bismarckian program, a smaller pure Beveridgean one (in accordance with empirical evidence), or nil. A larger correlation between longevity and productivity, or a larger average life expectancy, both make the equilibrium collective annuity program more Beveridgean, although at the expense of its size.

Keywords: generosity; redistributiveness; pay-as-you-go pensions; collective annuity; longevity; Kramer-Shepsle structure-induced equilibrium (search for similar items in EconPapers)
JEL-codes: D78 H55 (search for similar items in EconPapers)
Date: 2014-05
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Related works:
Journal Article: Life Expectancy Heterogeneity and the Political Support for Collective Annuities (2016)
Working Paper: Life expectancy heterogeneity and the political support for collective annuities (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:ide:wpaper:28246

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