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Life Expectancy Heterogeneity and the Political Support for Collective Annuities
Author(s) -
Cremer Helmuth,
Donder Philippe
Publication year - 2016
Publication title -
the scandinavian journal of economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.725
H-Index - 64
eISSN - 1467-9442
pISSN - 0347-0520
DOI - 10.1111/sjoe.12153
Subject(s) - economics , life expectancy , annuity , earnings , longevity , productivity , empirical evidence , social security , labour economics , monetary economics , econometrics , pension , life annuity , macroeconomics , finance , sociology , population , philosophy , epistemology , biology , genetics , market economy , demography
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.