THIS COURSE IS NOT TAUGHT ANY MORE. The last time that this course can be passed is in the faculty exam in September. The exam includes all handouts that are available below, but not articles in the literature list.

This course analyzes political economics models related to social security (public pensions) and public education. The course starts with an overview of median voter models, and discusses also interest-group based models. After this, the course explores seven other topics.

I list below a selection of useful reading.


Handouts:

Introduction and basic model
The effects of population aging
Social security and education
Early retirement
Reforming social security
Military draft

1. Median voter and interest groups models of social security:

Boadway, R.W. and Wildasin, D.E. (1999). A Median Voter Model of Social Security. International Economic Review 30, 307-328.

Browning, E. (1975). Why the Social Insurance Budget is too Large in a Democratic Society. Economic Inquiry 13, 373-88.

Cooley, T.F. and Soares, J. (1999). A Positive Theory of Social Security Based on Reputation. Journal of Political Economy 107, 135-160. *

Galasso, V. and Profeta, P. (2002). The Political Economy of Social Security: A Survey. European Journal of Political Economy 18, 1-29. *

Grossman, G.M. and Helpman, E. (1998). Intergenerational Redistribution with Short-lived Governments. The Economic Journal 108, 1299-1329.

Mulligan, C. and Sala-i-Martin, X. (2004). Internationally Common Features of Public Old-Age Pensions, and Their Implications for Models of the Public Sector.
Advances in Economic Analysis & Policy, 4, Article 4. *

Mulligan, C. and Sala-i-Martin, X. (2004). Political and Economic Forces Sustaining Social Security. Advances in Economic Analysis & Policy, 4, Article 5.

Persson, T. and Tabellini, G. (2000). Political Economics. MIT Press. Pages 124-132.

2. Earnings-related and flat-rate benefits:

Casamatta, G., H. Cremer, and P. Pestieau (2000). The Political Economy of Social Security. Scandinavian Journal of Economics, 102, 503-522.

Conde-Ruiz, J.I. and Profeta, P. (2007). The Redistributive Design of Social Security Systems. Economic Journal 117, 686-712. *

Koethenbuerger, M., Poutvaara, P. and Profeta, P. (2008). Why are More Redistributive Social Security Systems Smaller? A Median Voter Approach. Oxford Economic Papers 60, 275–292. *

3. Population aging:

Casamatta, G., Cremer, H. and Pestieau P. (2001). Demographic Shock and Social Security: A Political Economy Perspective. International Tax and Public Finance 8, 417-429. *

Razin, A., Sadka, E., and Swagel, P. (2002). The Aging Population and the Size of the Welfare State. Journal of Political Economy 110, 900-918.

Sinn, H.-W. and Uebelmesser, S. (2002). Pensions and the Path to Gerontocracy in Germany. European Journal of Political Economy 19, 153-158. *

4. Education and social security:

Becker, G. and Murphy, K. (1988). The Family and the State. Journal of Law and Economics 31, 1-18.

Boldrin, M. and Montes, A. (2005). The Intergenerational State. Education and Pensions. Review of Economic Studies 72, 651-664. *

Hassler, J., Rodríguez Mora J.V., Storesletten, K. and Zilibotti, F. (2003). The Survival of the Welfare State. American Economic Review 93, 87-112. *

Konrad, K.A. (1995). Social Security and Strategic Inter-vivos Transfers of Social Capital. Journal of Population Economics 8, 315-326.

Pogue, T.F. and Sgontz, L.G. (1977). Social Security and Investment in Human Capital. National Tax Journal 30,157-169.

Poutvaara, P. (2003). Gerontocracy Revisited: Unilateral Transfer to the Young May Benefit the Middle-aged. Journal of Public Economics 88, 161-74.

Poutvaara, P. (2006). On the Political Economy of Social Security and Public Education. Journal of Population Economics 19, 345-365. *

Rangel, A. (2003). Forward and Backward Intergenerational Goods: Why is Social Security Good for the Environment? American Economic Review 93, 813-834.*

5. Early retirement:

Conde Ruiz, J.I. and Galasso, V. (2003). Early Retirement. Review of Economic Dynamics 6, 12-36.

Conde Ruiz, J.I., Galasso, V. and Profeta, P. (2005). The Evolution of Retirement. CEPR DP 4863.

Mulligan, C. and Sala-i-Martin, X. (1999). Gerontocracy, Retirement and Social Security. NBER WP 7117.

6. Scope for reforming social security:

Aaron, H.J. (1966). The Social Insurance Paradox. Canadian Journal of Economics and Political Science 33, 371-74.

Breyer, F. (1989). On the Intergenerational Pareto Efficiency of Pay-as-you-go Financed Pension Systems. Journal of Institutional and Theoretical Economics 145, 643-58.

Brunner, J.K. (1996). Transition from a Pay-as-you-go to a Fully Funded System: The Case of Differing Individuals and Intragenerational Fairness. Journal of Public Economics 60, 131-46.

Diamond, P.A. (1996). Proposals to Restructure Social Security. Journal of Economic Perspectives 10, 67-88. *

Feldstein, M. (1996).The Missing Piece in Policy Analysis: Social Security Reform. American Economic Review 86, 1-14. *

Fenge, R. (1995). Pareto-efficiency of the Pay-as-you-go Pension System with Intragenerational Fairness. FinanzArchiv 52, 357-64.

Köthenbürger, M. and Poutvaara, P. (2006). Social Security Reform and Investment in Education: Is there Scope for a Pareto-improvement? Economica 73, 299–319. *

Sinn, H.-W. (2000). Why a Funded Pension System is Useful and Why It Is Not Useful. International Tax and Public Finance 7, 389-410. *

Verbon, H.A.A. (1989). Conversion Policies for Public Pension Plans in a Small Open Economy. In B.A. Gustafsson and N.A. Klevmarken (eds.), The Political Economy of Social Security. Amsterdam and New York: Elsevier.

7. Generational incidence and political economy of conscription:

Keller, K., Poutvaara, P. and Wagener, A. (2009). Military Draft and Economic Growth in OECD Countries. Defence and Peace Economics 20, 373-393.

Lau, M. I., Poutvaara, P. and Wagener, A. (2004). Dynamic Costs of the Draft. German Economic Review 5, 381-406.

Poutvaara, P. and Wagener, A. (2007). To Draft or Not to Draft? Inefficiency, Generational Incidence, and Political Economy of Military Conscription. European Journal of Political Economy 23, 975–987 *

Poutvaara, P. and Wagener, A. (2007). Conscription: Economic Costs and Political Allure. Economics of Peace and Security Journal 2, 6-15.

Justman, M. and Thisse, J. (1997). Implications of the Mobility of Skilled Labor for Local Public Funding of Higher Education. Economics Letters 55, 409-412.

Wildasin, D. E. (2000). Labor Market Integration, Investment in Risky Human Capital, and Fiscal Competition. American Economic Review 90, 73-95.