Working Papers, Department of Economics, Lund University
Political economy and pensions in ageing societies – a note on how an ”impossible” reform was implemented in Sweden.
Abstract: Ageing puts a strain on most countries’ pension systems;
forecasts show them to be more or less unsustainable. Evidence from social
choice research, theoretical as well as empirical, does not seem to offer a
way out of the dilemma, as the median voter will resist a reform. Despite
this, Sweden has implemented a major reform, supposedly making the system
sustainable. The question in this paper is thus: how was it possible to
launch such a reform in Sweden? The analysis is based on majority voting
models. Important explanatory factors are age structure as well as the age
of the median voter; both of these go against the probability of a reform.
A focus on age structure in combination with transitional rules and
specific features of the reform may provide an explanation.
Keywords: political economy; pension reform; median voter; age structure; (follow links to similar papers)
JEL-Codes: D72; H55; J26; (follow links to similar papers)
16 pages, June 7, 2005
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