Resource title

On the Political Economy of Social Security and Public Education

Resource image

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Resource description

This paper analyzes simultaneous voting on the wage tax rate and investment in public education with three overlapping generations and productivity differences inside each cohort. Wage tax revenue finances public education and social security benefits. The presence of productivity differences introduces a time-consistency problem with repeated voting. This can be solved by trigger strategies which do not punish upward deviations in the wage tax rate. If there are multiple equilibria, then higher tax rates are associated with more education. Surprisingly, the median voter may be a young citizen even when cohorts are of the same size.

Resource author

Panu Poutvaara

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Resource publish date

Resource language

eng

Resource content type

text/html

Resource resource URL

http://hdl.handle.net/10419/20706

Resource license

Adapt according to the presented license agreement and reference the original author.