Public pensions and voting on immigration

In a recent paper, Scholten and Thum (1996) analyze the impact of a pay-as-you-go (PAYG) pension system with a fixed replacement ratio on the immigration policy in a democracy. We extend the analysis of median voter's choice in two respects. First, in contrast to Scholten and Thum (1996) who assume myopic voting behavior, our paper considers fully rational agents and provides a solution under this more complex behavioral assumption. Voting with rational agents yields a more liberal immigration policy than with myopic voters. Second, we examine a different decision structure with a fixed contribution rate to the pension system. In this case the majority rule leads to a completely different solution.     

Will you still trust me tomorrow? The causal effect of terrorism on social trust

The absence of a deselection threat in incumbents’ last term in office can be negative or positive for the polity. Some politicians may reduce their efforts, while others may pursue beneficial long-term policies that may be unpopular in the short term. We propose a novel pension system that solves the effort problem while preserving the willingness to implement long-term policies. The idea is to give politicians the option to choose between a flexible and a fixed pension scheme. While in the fixed scheme, performance has no impact on the pension, the pension increases with short-term performance in the flexible scheme, using the vote share of the officeholder’s party in the next election as a performance indicator. Such a pension choice improves the well-being of citizens since officeholders are encouraged to invest in those activities that are beneficial for society. We analyze the properties and consequences of such a system. Finally, we extend the pension system with choice to non-last-term situations and derive a general welfare result.     

Social Security: a financial appraisal for the median voter

Several explanations have been proposed for why voters continue to support unfunded social security systems. Browning (1975) suggests that the extremely large unfunded pension systems of most democracies depend on the existence of a voting majority composed of middle-aged and older people who fail to fully internalize the cost of financing the system. In fact, when voting, economically rational workers consider only their current and future contributions to the system and their expected pension benefits--not their past contributions, which they regard as sunk costs. If, for a majority of voters, the expected continuation return from social security exceeds the return from alternative assets, an unfunded social security system is politically sustainable. This article explores the validity of Browning's proposition by quantifying the returns that U.S. voters in presidential elections from 1964 to 1996 have obtained, or expect to obtain, from Social Security. Did "investments" in Social Security outperform alternative forms of investment, such as mutual funds or pension funds, for a majority of the voters? What can be expected for the future? The U.S. Social Security system redistributes income within age cohorts on the basis of sex, income, and marital status. To account for some of these features, the median voter is represented by a family unit whose members--a husband who accounts for 70 percent of household earnings and a wife who accounts for 30 percent--make joint economic and voting decisions. Thus, retirement and survival benefits paid out to the spouse of an insured worker can be included in the calculation of Social Security returns. Interval estimates of voters' family incomes from the U.S. Census Bureau were used to obtain the median voter's household earnings. The median voter's age is derived from the ages of those who voted in presidential elections, not from the ages of the entire electorate. The median voter's contributions to Social Security are the product of the joint employer/employee Old-Age and Survivors Insurance (OASI) tax rate and employee earnings. Data on actual contributions are available for median voters in the 1964 to 1976 elections; Social Security Administration (SSA) estimates are used for future tax rates and average wage growth rates. Data on actual old-age, retirement, and survivor benefits, as well as estimates of future benefits, are also available from SSA. Analysis of ex-post returns from "investing" in Social Security and from a buy-and-hold strategy applied to three alternative assets--the Standard & Poor's Composite Index (S&P), the Dow Jones Industrial Average (DJIA), and U.S. government bonds--shows surprising results. In 1964 and 1968, Social Security largely outperformed the other three assets. In 1972, Social Security and the stock market performed almost equally. In 1976, however, the median voter would have been better off in the stock market. The expected returns for median voters in later elections cannot be directly compared with realized returns from alternative assets. However, estimates range from 5.7 percent in 1984 to 7.0 percent in 1996 and thus compare favorably with average returns of 5.6 percent for S&P, 5.3 percent for DJIA, and 2.1 percent for government bonds over the 1964-1996 period. Although these findings must be taken with caution since they compare ex-post returns, they show that, despite a continuous reduction in profitability, Social Security still represents a safe, high-return asset for a majority of families.     

Variation of the electorate: Veto and purge

In the paradigm social choice problem, there is a fixed set of alternatives and a fixed set of voters. This essay considers variations of the electorate when some subset of voters has a special voice on some subset of alternatives. We formalized such a situation by means of the veto function. We focus on stable veto functions, exhibit a stable liberal social choice function and promotion mechanism, and investigate a notion of stability for groups whose membership itself is the social state.     

Recalibrating social protection: Electoral competition and the new partisan politics of the welfare state

This article investigates the new party politics of welfare states with a particular focus on electoral competition. The argument is that welfare state politics are no longer just about more or less, but involve trade-offs among ‘new’ versus ‘old’ social rights, and hence social investment versus social consumption. However, party priorities on these issues are highly dependent upon their electoral situation. As electoral competition becomes more intense, parties focus more on vote maximisation than on their traditional policy goals. For left parties, this means focusing more on social investment, which appeals to their growing constituency of progressive sociocultural professionals, and less on defending the traditional income maintenance programmes favoured by their core blue-collar voters. Centre-right parties, on the other hand, should hesitate to retrench old social rights when electoral competition intensifies because they need to prioritise their appeal to culturally conservative working-class voters over their traditional fiscally conservative policy profiles. Using a new dataset and a recently published measure of electoral competitiveness, the article shows that as electoral competition intensifies, left governments are willing to prioritise social investment by reducing pension rights generosity in order to expand programmes for new social risks, while centre-right governments by contrast avoid retrenchment of pension rights and pension expenditures. The findings demonstrate that this relationship is moderated by the presence of a credible radical right challenger, which increases the electoral risk of welfare state recalibration.     

基本养老保险个人账户收益率与替代率关系定量分析

基本养老保险之目的是为退休人员提供合意的退休金，避免陷入老年贫困。本文分别从现行制度计发办法和实际生命余岁精算的角度出发，定量分析了我国基本养老制度个人账户收益率与其替代率的关系，提出应高度重视当前个人账户低收益率所带来的严重后果，较高的收益率既是替代率的重要保证，也是累积制优越性的重要体现。而收益率的重要性却没有在政策制定中充分体现，低水平计息、微不足道的替代率皆与当初设想相去甚远。结论：既然建立了个人账户就应该将其做实并通过市场化运营获得较高的回报；而在还未有效地解决好收益率的情况下，不应草率地再将个人账户推广至其他群体，以免使更多人受损。     

英国的公务员养老保险制度及其启示

英国的公务员养老保险制度实行国家基本养老保险、公务员职业养老保险和个人自愿养老储蓄相结合的三层次部分积累模式,与普通国民养老保险制度相融合。从公务员与其他群体养老保险制度的比较来看,并没有出现公务员与其他群体之间养老保险待遇的较大差距。总结英国的公务员养老保险制度的经验教训可以为中国公务员养老保险制度改革提供参考。     

Efficient use of reference group cues in a single dimension

If there are groups whose endorsements voters can use as positive (or negative) cues, we demonstrate that voters do not need to know anything directly about candidate positions to be able to identify the candidate whose issue positions and performance is likely to be closest to the voter's own preferences. In one dimension we show that, given certain simplifying assumptions, voters are best off adopting the choice recommended by the single reference group to which they are closest. We also show that even a decision by reference groups not to endorse any candidate may be informative to voters.     

When is buying votes wrong?

In modern liberal democracies, offering individual voters in political elections money for their votes is wrong and illegal; offering groups of voters particular benefits in exchange for their votes is constitutionally protected. Voters do not sell their votes; instead, voters assign their votes to legislative representatives who sell or trade for them.Examining the role of coalition costs in political and corporate elections, we argue that these rules protect voters from themselves, from being compelled to approve proposals that leave them individually worse off. Simultaneously, these rules allow voters to seek particular benefits through collective organization and legislative representation.     

Female representation and electoral clientelism: New insights from South African municipal electionss

Do citizens experience less electoral clientelism in polities with more elected female representatives? The current literature is remarkably silent on the role of gender and female political representation for electoral clientelism. Due to gender differences in issue priorities, targeted constituent groups, networks and resources, we argue that voters experience less clientelism in municipalities with a higher proportion of female politicians because either female politicians are likely to engage less in clientelism or women are less likely to be viable candidates in more clientelist settings. Through either mechanism, we expect all voters – and female voters in particular – to experience less exposure to clientelism in municipalities with higher female representation. We examine this idea using survey data from the 2016 municipal elections in South Africa – a country with high levels of female representation in politics but increasing problems of corruption and patronage in the political system. Our findings are consistent with the argument that municipalities with more elected female councilors have considerably lower rates of electoral clientelism and that this mostly affects whether female voters are targeted by clientelist distribution. These findings shed new light on how women's representation in elected political office shapes the incidence and use of clientelist distribution during elections.     

Routes to party choice: Ideology,economic evaluations and voting at the 1997 British General Election

Abstract. Most conventional accounts of voting behaviour fit single models to the entire electorate, implicitly assuming that all voters respond to the same sets of influences, and do so in similar ways. However, a growing body of research suggests that this approach may be misleading, and that distinct groups of voters approach politics, and the electoral decision, from different perspectives. The paper takes a disaggregated look at voting in the 1997 British General Election, dividing voters into different groups according to their formal educational qualifications. Results suggest that different groups of voters respond to different stimuli, depending on their education, and on the party they are voting for.     

What drives public acceptance of reforms? Longitudinal evidence from a Dutch pension reform

Governments often find it hard to pursue economic reforms, even if they eventually will benefit a majority of voters. The literature remains inconclusive about the reasons for this. Some scholars, on the one hand, stress the role of distributional conflicts between different classes, for instance dividing the young and the old in the case of pay-as-you-go pensions. Others have highlighted that resistance to reform is rather broad-based owing to the public’s poor understanding of the need for reform. This paper attempts to disentangle the drivers of public acceptance of reform by means of a case study: the 2012 increase of the Dutch statutory retirement age from 65 to 67. We exploit a unique longitudinal dataset on the attitudes of Dutch households respecting pension reform in the 2003–2013 period. Our findings offer various new insights. First, we find that education, occupational status and psychological traits were the most systematic drivers of reform preferences, while age had a limited impact. Second, and significantly, we find that the year fixed effects were the main drivers of respondents’ acceptance of reform. We interpret the pattern of the year coefficients as evidence of a collective learning process whereby households gradually updated their expectations and reform preferences in light of new information.     

事业单位养老金制度的帕累托改进条件分析

事业单位养老金制度是社会保障体系的重要组成部分,本文分析了目前我国事业单位养老金制度的弊端及改革滞后的主要原因和存在问题,提出了"职业养老金替代退休金和对接国民基础养老金"的二元结构事业单位养老金方案;利用世代交替模型,求出这一制度安排相对于原有的退休金制度,实现"事业单位职工的养老金待遇不降低,我国整体养老金制度得到改善,财政养老金负担趋于下降"这一"帕累托改进"目标的条件;分析了该二元结构养老金方案的帕累托改进效应及这一方案在推进国民基础养老金改革、促进职业养老金和养老金市场的发展、完善养老金个人账户和公共服务体系等方面所能发挥的积极的社会效应;分析了方案实施的政治、经济和社会基础并通过仿真分析验证了本方案的有效性和可行性。     

Moderate,extreme, or both? How voters respond to ideologically unpredictable candidates

Candidates and parties often face a choice between endorsing policies that appeal to their core constituencies or generate support from more diverse groups of voters. While the latter strategy may make overtures to a wider set of citizens, existing literature says little about how the overall mix of issue positions affects electoral support. We argue that candidates who endorse diverse sets of policy positions appear unpredictable to voters and incur subsequent electoral penalties. Using data from the 2006 congressional elections, we find that ideological predictability substantially increases electoral support at both the individual and aggregate levels and that voters perceive greater ideological congruence from more predictable candidates. Our results have important implications for candidate and party strategies and suggest that voters are responsive to the mean and the variance of candidates’ policy stances.     

Public Pensions and Collective Bargaining Rights: Evidence from State and Local Governments

An aging workforce and increasing retirement benefits are ongoing problems for states and municipalities. Unions are often blamed for governments offering too generous pension benefits. This contributes to budgetary pressures in some state and municipal governments. This article analyzes the impact of collective bargaining on pension benefit generosity under different economic conditions. The study finds that the impact of collective bargaining on pension benefits is not consistent over time or across pension plans. Collective bargaining has a positive effect on pension benefits under worsening economic conditions. Additionally, unions indirectly influence pension benefit generosity through campaign donations and unionization intensity. The findings suggest mixed impacts of collective bargaining on different groups of public employees regarding pension contributions. The article concludes with implications for the role of unions in public financial performance and strategic human resource management during fiscal austerity.     

Proportional versus winner-take-all electoral vote allocations

This paper considers how the welfare of voters is affected under an Electoral College system when some state elects to award electoral votes in proportion to the number of votes received by each candidate rather than awarding all electoral votes to the winner of the state. I show that a majority of voters in that state is made worse off as a result of the change. I also give conditions under which voters in other states are made better or worse off as a result of the change.     

Caregiver credits in France, Germany, and Sweden: lessons for the United States

Recently, analysts in the United States (US) have proposed adopting caregiver credits, or pension credits, provided to individuals for time spent out of the workforce while caring for dependent children and sick or elderly relatives. The primary objective of these credits, used in almost all public pension systems in the European Union, is to improve the adequacy of old-age benefits for women whose gaps in workforce participation typically lead to fewer years of contributions, lower lifetime average earnings, and consequently lower pensions. This article examines caregiver credits in the context of future reforms to the US Social Security system, with attention given to the adequacy of current spouse and survivor benefits and how changing marital patterns and family structures have increased the risk of old-age poverty among certain groups of women. It then analyzes caregiver credit programs in selected countries, with particular focus on design, administration, and cost.     

An Options Pricing Method for Calculating the Market Price of Public Sector Pension Liabilities

State and local public sector employee pensions are widely known to be underfunded, but pension financial reports do not reveal the true extent of funding shortfalls. Pension accounting methods assume that plan investments can earn high returns without taking any account of the market risk involved. This gives a false sense of the financial strength of public sector pensions and understates risks to taxpayers. Since accrued pension benefits are legally and constitutionally protected, any pension funding shortfalls must be met by taxpayers. This benefit guarantee amounts to an effective put option on plan investments, the cost of which is not disclosed under current actuarial accounting. This paper uses an options pricing method to calculate the market value of taxpayer guarantees underlying public sector pensions. The average funding ratio declines from 83 percent under actuarial accounting to 45 percent under this options pricing approach. The typical state has unfunded public pension liabilities three times larger than its explicit government debt. Public pension shortfalls equal an average of 27 percent of state gross domestic product, posing a significant fiscal challenge in coming years. Accurate measures of public pension liabilities are important for policy makers, taxpayers, investors considering the economic environment in which to start or locate a business, and bond purchasers considering the risk premia appropriate to municipal government bonds that are in practice subordinate to public pension liabilities.     

Election Campaigns,Issue Focus and Voting Intentions: Survey Experiments of Norwegian Voters

This article investigates whether and how changes in issue focus in election campaigns affect voting intention, even if no preference change takes place, and whether such effects vary systematically across different groups of voters. Evidence is reported from two survey experiments of Norwegian voters, where respondents were treated with information drawing their attention towards issues pertaining either to immigration or the environment. Although irrelevant for policy learning or persuasion, this information strongly increased the support of particular parties. More specifically, parties with ‘ownership’ of the issues involved gained votes. Certain types of voters were more likely to change voting intentions post‐treatment than others, but which types crucially depended on the issue area under focus. Nevertheless, the results indicate that the issue focus of campaigns is very important for vote choice. Hence, one should expect that, for instance, even ‘neutral’ political news coverage at or close to election day could affect voters in predictable ways. Furthermore, one should expect different parties to fight hard to steer the focus of campaigns towards issues where they have ownership.