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Paola Profeta - One of the best experts on this subject based on the ideXlab platform.
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why are more redistributive social security systems smaller a Median Voter approach
Munich Reprints in Economics, 2007Co-Authors: Marko Koethenbuerger, Panu Poutvaara, Paola ProfetaAbstract:One of the stylized facts of unfunded social security programs is that programs are larger in size, measured relative to the GDP, the tighter the link between pension claims and past earnings. We provide a political economy explanation of this stylized fact in a Median Voter model, where people vote on the social security tax rate. We compare pension systems with flat-rate and earnings-related benefit formulas. Only flat-rate benefits redistribute within a generation from high to low income groups. If labor supply is endogenous, they also imply larger efficiency costs than earnings-related schemes. Using data on eight European countries, we find that the Median Voter is typically middle-aged with high income. For these Voters, earnings-related systems are more attractive both because of less intragenerational redistribution and lower distortions in labor supply. The Median Voter model is also able to account for a considerable degree of cross-country variation in contribution rates.
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Why are More Redistributive Social Security Systems Smaller? A Median Voter Approach *
Oxford Economic Papers, 2007Co-Authors: Marko Koethenbuerger, Panu Poutvaara, Paola ProfetaAbstract:One of the stylized facts of unfunded social security programs is that programs are larger in size, measured relative to the GDP, the tighter the link between pension claims and past earnings. We provide a political economy explanation of this stylized fact in a Median Voter model, where people vote on the social security tax rate. We compare pension systems with flat-rate and earnings-related benefit formulas. Only flat-rate benefits redistribute within a generation from high to low income groups. If labor supply is endogenous, they also imply larger efficiency costs than earnings-related schemes. Using data on eight European countries, we find that the Median Voter is typically middle-aged with high income. For these Voters, earnings-related systems are more attractive both because of less intragenerational redistribution and lower distortions in labor supply. The Median Voter model is also able to account for a considerable degree of cross-country variation in contribution rates.
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why are more redistributive social security systems smaller a Median Voter approach
Research Papers in Economics, 2005Co-Authors: Marko Koethenbuerger, Panu Poutvaara, Paola ProfetaAbstract:We suggest a political economy explanation for the stylized fact that intragenerationally more redistributive social security systems are smaller. We relate the stylized fact to an "efficiency-redistribution" trade-off to be resolved by political process. The inefficiency of social security financing is due to endogenous labor supply. Using data on eight European countries, we find that the stylized fact and a considerable degree of cross-country variation in contribution rates can be explained by the Median Voter model.
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why are more redistributive social security systems smaller a Median Voter approach
Social Science Research Network, 2005Co-Authors: Marko Koethenbuerger, Panu Poutvaara, Paola ProfetaAbstract:We suggest a political economy explanation for the stylized fact that intragenerationally more redistributive social security systems are smaller. Our key insight is that linking benefits to past earnings (less redistributiveness) reduces the efficiency cost of social security (due to endogenous labor supply). This encourages Voters who benefit from social security to support higher contribution rates in political equilibrium. We test our theory with a numerical analysis of eight European countries. Our simple, but suggestive Median Voter model performs relatively well in explaining the stylized fact and cross-country differences in social security contribution rates.
Marko Koethenbuerger - One of the best experts on this subject based on the ideXlab platform.
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why are more redistributive social security systems smaller a Median Voter approach
Munich Reprints in Economics, 2007Co-Authors: Marko Koethenbuerger, Panu Poutvaara, Paola ProfetaAbstract:One of the stylized facts of unfunded social security programs is that programs are larger in size, measured relative to the GDP, the tighter the link between pension claims and past earnings. We provide a political economy explanation of this stylized fact in a Median Voter model, where people vote on the social security tax rate. We compare pension systems with flat-rate and earnings-related benefit formulas. Only flat-rate benefits redistribute within a generation from high to low income groups. If labor supply is endogenous, they also imply larger efficiency costs than earnings-related schemes. Using data on eight European countries, we find that the Median Voter is typically middle-aged with high income. For these Voters, earnings-related systems are more attractive both because of less intragenerational redistribution and lower distortions in labor supply. The Median Voter model is also able to account for a considerable degree of cross-country variation in contribution rates.
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Why are More Redistributive Social Security Systems Smaller? A Median Voter Approach *
Oxford Economic Papers, 2007Co-Authors: Marko Koethenbuerger, Panu Poutvaara, Paola ProfetaAbstract:One of the stylized facts of unfunded social security programs is that programs are larger in size, measured relative to the GDP, the tighter the link between pension claims and past earnings. We provide a political economy explanation of this stylized fact in a Median Voter model, where people vote on the social security tax rate. We compare pension systems with flat-rate and earnings-related benefit formulas. Only flat-rate benefits redistribute within a generation from high to low income groups. If labor supply is endogenous, they also imply larger efficiency costs than earnings-related schemes. Using data on eight European countries, we find that the Median Voter is typically middle-aged with high income. For these Voters, earnings-related systems are more attractive both because of less intragenerational redistribution and lower distortions in labor supply. The Median Voter model is also able to account for a considerable degree of cross-country variation in contribution rates.
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why are more redistributive social security systems smaller a Median Voter approach
Research Papers in Economics, 2005Co-Authors: Marko Koethenbuerger, Panu Poutvaara, Paola ProfetaAbstract:We suggest a political economy explanation for the stylized fact that intragenerationally more redistributive social security systems are smaller. We relate the stylized fact to an "efficiency-redistribution" trade-off to be resolved by political process. The inefficiency of social security financing is due to endogenous labor supply. Using data on eight European countries, we find that the stylized fact and a considerable degree of cross-country variation in contribution rates can be explained by the Median Voter model.
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why are more redistributive social security systems smaller a Median Voter approach
Social Science Research Network, 2005Co-Authors: Marko Koethenbuerger, Panu Poutvaara, Paola ProfetaAbstract:We suggest a political economy explanation for the stylized fact that intragenerationally more redistributive social security systems are smaller. Our key insight is that linking benefits to past earnings (less redistributiveness) reduces the efficiency cost of social security (due to endogenous labor supply). This encourages Voters who benefit from social security to support higher contribution rates in political equilibrium. We test our theory with a numerical analysis of eight European countries. Our simple, but suggestive Median Voter model performs relatively well in explaining the stylized fact and cross-country differences in social security contribution rates.
Branko Milanovic - One of the best experts on this subject based on the ideXlab platform.
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the Median Voter hypothesis income inequality and income
HEW, 2003Co-Authors: Branko MilanovicAbstract:The Median Voter hypothesis has been central to an extensive literature on consequences of income distribution. For example, it has been proposed that greater inequality is associated with lower growth, because of the greater redistribution that is sought by the Median Voter when income distribution is less equal. There have however been no proper tests of the Median-Voter hypothesis concerning redistribution, because of previous absence of data on factor income distribution (that is, incomes before taxes and transfers) across households, and thus on the gains by poorer households from redistribution. The study reported in this paper is based on the required data, with 79 observations drawn from household budget surveys from 24 democracies. The results strongly support the conclusion that countries with greater inequality of factor income redistribute more to the poor. This is so even when we control for the share of the elderly in the population and for pension transfers. The evidence that the Median-Voter hypothesis adequately describes the collective-choice mechanism is however considerably weaker. Although middle-income groups gain more/or lose less through redistribution in countries where initial (factor) income distribution is more unequal, this regularity is all but lost when, by excluding pensions, we look only at explicit redistributive social transfers from which the middle classes contemporaneously gain little.This leaves us searching for alternative explanations: do middle-classes gain from transfers in the long-run even if not contemporeneously?, or is the Median Voter hypothesis, based on direct democracy, a proper representation of the the mechanisms of collective-decision making in representative democracy?
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the Median Voter hypothesis income inequality and income redistribution an empirical test with the required data
European Journal of Political Economy, 2000Co-Authors: Branko MilanovicAbstract:The Median-Voter hypothesis has been central to an extensive literature on consequences of income redistribution. For example, it has been proposed that greater inequality is associated with lower growth, because of the greater redistribution that is sought by the Median Voter when income distribution is less equal. There have however been no proper tests of the Median-Voter hypothesis concerning redistribution, because of previous absence . of data on factor-income distribution that is, incomes before taxes and transfers across households, and thus on the gains by poorer households from redistribution. The study reported in this paper is based on the required data, with 79 observations drawn from household budget surveys from 24 democracies. The results strongly support the conclusion that countries with greater inequality of factor income redistribute more to the poor. This is so even when we control for the share of the elderly in the population and for pension transfers. The evidence that the Median-Voter hypothesis adequately describes the collec- tive-choice mechanism is however considerably weaker. Although middle-income groups . gain moreror lose less through redistribution in countries where initial factor income distribution is more unequal, this regularity is all but lost when, by excluding pensions, we
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the Median Voter hypothesis income inequality and income redistribution an empirical test with the required data
Research Papers in Economics, 2000Co-Authors: Branko MilanovicAbstract:The Median Voter hypothesis has been central to an extensive literature on consequences of income distribution. For example, it has been proposed that greater inequality is associated with lower growth, because of the greater redistribution that is sought by the Median Voter when income distribution is less equal. There have however been no proper tests of the Median-Voter hypothesis concerning redistribution, because of previous absence of data on factor income distribution (that is, incomes before taxes and transfers) across households, and thus on the gains by poorer households from redistribution. The study reported in this paper is based on the required data, with 79 observations drawn from household budget surveys from 24 democracies. The results strongly support the conclusion that countries with greater inequality of factor income redistribute more to the poor. This is so even when we control for the share of the elderly in the population and for pension transfers. The evidence that the Median-Voter hypothesis adequately describes the collective-choice mechanism is however considerably weaker. Although middle-income groups gain more/or lose less through redistribution in countries where initial (factor) income distribution is more unequal, this regularity is all but lost when, by excluding pensions, we look only at explicit redistributive social transfers from which the middle classes contemporaneously gain little. This leaves us searching for alternative explanations: do middle-classes gain from transfers in the long-run even if not contemporaneously, or is the Median Voter hypothesis, based on direct democracy, a proper representation of the mechanisms of collective-decision making in representative democracy?
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do more unequal countries redistribute more does the Median Voter hypothesis hold
Research Papers in Economics, 1999Co-Authors: Branko MilanovicAbstract:The Median Voter hypothesis is important to endogenous growth theories because it provides the political mechanisms through which Voters in more unequal countries re-distribute a greater proportion of income and thus (it is argued), by blunting incentives, reduce the country's growth rate. But he hypothesis was never properly tested because of lack of data on the distribution of (pre-tax and transfer) factor income across households, and hence on the exact amount of gain by the poorest quintile of poorest half. The author tests the hypothesis using t9 observations drawn from household budget surveys from 24 democracies. The data strongly support the hypothesis that countries with more unequal distribution of factor income redistribute more in favor of the poor - even when the analysis controls for the older people's share in total population (that is, for pension transfers). The evidence on the Median Voter hypothesis is much weaker. The author does find that middle-income groups gain more (or lose less) through redistribution in countries where initial (factor) income distribution is more unequal. This regularity evaporates, however, when pensions are dropped from social transfers and the focus is strictly on the more re-distributive social transfers.
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do more unequal countries redistribute more does the Median Voter hypothesis hold
Social Science Research Network, 1999Co-Authors: Branko MilanovicAbstract:The Median Voter hypothesis plays an important role in endogenous growth theories. It provides the political mechanism through which Voters in more unequal countries redistribute a larger proportion of income and thus, it is argued, by blunting incentives reduce country's growth rate. However, due to the lack of data on factor income (i.e. pre-tax and transfer) distribution across households, and thus on the exact amount of gain by the poorest half of households (the poor), the hypothesis was never properly tested. We test it here on 79 observations drawn from household budget surveys from 24 democracies. We find that the data strongly support the hypothesis that countries with more unequal distribution of factor income redistribute more in favor of the poor - even when we control for the share of the elderly in the population, or for pension transfers. But the evidence on the exact mechanism whereby this takes place - the Median Voter hypothesis - is much weaker. We do find that the middle income groups gain more/or lose less through redistribution in countries where initial (factor) income distribution is more unequal, but this regularity evaporates only we drop pensions from social transfers and focus solely on the more redistributive social transfers. Furthermore, we cannot show that the middle income groups are always net beneficiaries of redistribution nor that the existing tax and transfer system are optimal from their perspective (in the sense that all alternative tax rates would yield lower net benefits to the middle income groups).
Panu Poutvaara - One of the best experts on this subject based on the ideXlab platform.
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why are more redistributive social security systems smaller a Median Voter approach
Munich Reprints in Economics, 2007Co-Authors: Marko Koethenbuerger, Panu Poutvaara, Paola ProfetaAbstract:One of the stylized facts of unfunded social security programs is that programs are larger in size, measured relative to the GDP, the tighter the link between pension claims and past earnings. We provide a political economy explanation of this stylized fact in a Median Voter model, where people vote on the social security tax rate. We compare pension systems with flat-rate and earnings-related benefit formulas. Only flat-rate benefits redistribute within a generation from high to low income groups. If labor supply is endogenous, they also imply larger efficiency costs than earnings-related schemes. Using data on eight European countries, we find that the Median Voter is typically middle-aged with high income. For these Voters, earnings-related systems are more attractive both because of less intragenerational redistribution and lower distortions in labor supply. The Median Voter model is also able to account for a considerable degree of cross-country variation in contribution rates.
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Why are More Redistributive Social Security Systems Smaller? A Median Voter Approach *
Oxford Economic Papers, 2007Co-Authors: Marko Koethenbuerger, Panu Poutvaara, Paola ProfetaAbstract:One of the stylized facts of unfunded social security programs is that programs are larger in size, measured relative to the GDP, the tighter the link between pension claims and past earnings. We provide a political economy explanation of this stylized fact in a Median Voter model, where people vote on the social security tax rate. We compare pension systems with flat-rate and earnings-related benefit formulas. Only flat-rate benefits redistribute within a generation from high to low income groups. If labor supply is endogenous, they also imply larger efficiency costs than earnings-related schemes. Using data on eight European countries, we find that the Median Voter is typically middle-aged with high income. For these Voters, earnings-related systems are more attractive both because of less intragenerational redistribution and lower distortions in labor supply. The Median Voter model is also able to account for a considerable degree of cross-country variation in contribution rates.
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why are more redistributive social security systems smaller a Median Voter approach
Research Papers in Economics, 2005Co-Authors: Marko Koethenbuerger, Panu Poutvaara, Paola ProfetaAbstract:We suggest a political economy explanation for the stylized fact that intragenerationally more redistributive social security systems are smaller. We relate the stylized fact to an "efficiency-redistribution" trade-off to be resolved by political process. The inefficiency of social security financing is due to endogenous labor supply. Using data on eight European countries, we find that the stylized fact and a considerable degree of cross-country variation in contribution rates can be explained by the Median Voter model.
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why are more redistributive social security systems smaller a Median Voter approach
Social Science Research Network, 2005Co-Authors: Marko Koethenbuerger, Panu Poutvaara, Paola ProfetaAbstract:We suggest a political economy explanation for the stylized fact that intragenerationally more redistributive social security systems are smaller. Our key insight is that linking benefits to past earnings (less redistributiveness) reduces the efficiency cost of social security (due to endogenous labor supply). This encourages Voters who benefit from social security to support higher contribution rates in political equilibrium. We test our theory with a numerical analysis of eight European countries. Our simple, but suggestive Median Voter model performs relatively well in explaining the stylized fact and cross-country differences in social security contribution rates.
Salvador Barbera - One of the best experts on this subject based on the ideXlab platform.
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top monotonicity a common root for single peakedness single crossing and the Median Voter result
Games and Economic Behavior, 2011Co-Authors: Salvador Barbera, Bernardo MorenoAbstract:When members of a voting body exhibit single peaked preferences, pair-wise majority voting equilibria (Condorcet winners) always exist. Moreover, they coincide with the Median(s) of the Votersʼ most preferred alternatives. This important fact is known as the Median Voter result. Variants of it also apply when single-peakedness fails, but preferences verify other domain restrictions, such as single-crossing, intermediateness or order restriction. Austen-Smith and Banks (1999) also proved that the result holds under single-peakedness, for a wide class of voting rules that includes the majority rule as a special case, and conveniently redefined versions of a Median. We extend and unify previous results. We propose a new domain condition, called top monotonicity, which encompasses all previous domains restrictions, allows for new ones and preserves a version of the Median Voter result for a large class of voting rules. We also show that top monotonicity arises in interesting economic environments.
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Maximal Domains of Preferences Preserving Strategy-Proofness for Generalized Median Voter Schemes
Social Choice and Welfare, 1999Co-Authors: Salvador Barbera, Jordi Massó, Alejandro NemeAbstract:We characterize the maximal sets of preferences under which generalized Median Voter schemes are strategy-proof. Those domains are defined by a qualified version of single-peakedness, which depends on the distribution of power among agents implied by each generalized Median Voter scheme.
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Generalized Median Voter Schemes and Committees
Journal of Economic Theory, 1993Co-Authors: Salvador Barbera, Faruk Gul, Ennio StacchettiAbstract:Abstract We define a multidimensional analogue of a single-peaked preference and generalize the notion of a Median Voter scheme. Every onto strategy-proof social choice function on a single-peaked domain is a generalized Median Voter scheme. Since a single-peaked preference can be identified unequivocally with its bliss point, one can view a social choice function as an Arrowian social welfare function. We show that a social choice function is strategy-proof iff, viewed as a social welfare function, it satisfies a monotonicity property. Finally, we investigate strategic decision making in hierarchical committees. Journal of Economic Literature Classification Numbers: C72, D71.
