Life Expectancy Heterogeneity and the Political Support for Collective Annuities |
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Authors: | Helmuth Cremer Philippe De Donder |
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Institution: | 1. Toulouse School of Economics, FR‐31015 Toulouse, FranceIDEI, University of Toulouse and Institut universitaire de France.;2. Toulouse School of Economics, FR‐31015 Toulouse, FranceGREMAQ‐CNRS and IDEI. |
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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. |
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Keywords: | Collective annuity generosity Kramer– Shepsle structure‐induced equilibrium longevity pay‐as‐you‐go pensions redistributiveness D78 H55 |
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