Public pensions and return migration

In a median-voter framework with pensions and immigration we show that only few unskilled immigrants are allowed into the country because the unskilled native median voter is concerned with negative effects on his or her wage, but not with the positive effects to other groups in society. When return migration is allowed for, the median voter is more willing to accept immigration because he or she can shift some of the burden to future generations.     

Public pensions and demographic change

He is a former John F. Kennedy Memorial Fellow at the Center for European Studies of Harvard University. He has written several books and articles on issues of labor market theory, work time, and social policy. He is author of Motive und Interessen im Arbeitszeitkonflikt: Eine Analyse der Entwicklung von Normalarbeitszeitstandardsand Zeit und Geld in privaten Haushalten: Gelegenheitsstruktur und Bedarf für Eigenarbeit als Determinanten sozialer Ungleichheit.He is also co-editor of Working Time in Transition: The Political Economy of Working Hours in Industrial Nations.     

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.     

Motivation of politicians and long-term policies

We analyze the motivation of politicians in democracies when long-term policies are socially desirable. Politicians receive utility from holding office and from the success of their projects. We refer to the two extreme types of politicians as “populists” and “policy success-seekers”. One result is that inefficiencies in the political process are smaller when a politician is of the populist type. When politicians offer incentive contracts, the problem of inefficient decision-making may be solved. The amount of money necessary to induce the incumbent to undertake the socially optimal project decreases with the degree of populism he displays.     

Characteristics of individuals with integrated pensions

Employer pensions that integrate benefits with Social Security have been the focus of relatively little research. Since changes in Social Security benefit levels and other program characteristics can affect the benefit levels and other features of integrated pension plans, it is important to know who is covered by these plans. This article examines the characteristics of workers covered by integrated pension plans, compared to those with nonintegrated plans and those with no pension coverage. Integrated pension plans are those that explicitly adjust their benefit structure to help compensate for the employer's contributions to the Social Security program. There are two basic integration methods used by defined benefit (DB) plans. The offset method causes a reduction in employer pension benefits by up to half of the Social Security retirement benefit; the excess rate method is characterized by an accrual rate that is lower for earnings below the Social Security taxable maximum than above it. Defined contribution (DC) pension plans can be integrated along the lines of the excess rate method. To date, research on integrated pensions has focused on plan characteristics, as reported to the Bureau of Labor Statistics (BLS) through its Employee Benefits Survey (EBS). This research has examined the prevalence of integration among full-time, private sector workers by industry, firm size, and broad occupational categories. However, because the EBS provides virtually no data on worker characteristics, analyses of the effects of pension integration on retirement benefits have used hypothetical workers, varying according to assumed levels of earnings and job tenure. This kind of analysis is not particularly helpful in examining the potential effects of changes in the Social Security program on workers' pension benefits. However, data on pension integration at the individual level are available, most recently from the Health and Retirement Study (HRS), a nationally representative survey of individuals aged 51-61 in 1992. This dataset provides the basis for the analysis presented here. The following are some of the major findings from this analysis. The incidence of pension integration in the HRS sample is 32 percent of all workers with a pension (14 percent of all workers). The HRS can also identify integrated DC plans, a statistic that is not available from BLS data. The rate of integration for workers with only DC plans is 8 percent. After controlling for other variables, several socio-demographic characteristics are significantly related to the incidence of integration. The probability of having an integrated pension is 4.6 percentage points less for men compared to women. Non-Hispanic blacks are 6.4 percentage points less likely than non-Hispanic whites to have integrated pensions. Union members are 14 percentage points less likely to have integrated pensions, while workers with less than a graduate level education are at least 15 percentage points more likely to have a pension that is integrated. Some earnings and pension characteristics are also significantly correlated with pension integration. Earnings are positively related, with the probability of having an integrated pension increasing by 2 percentage points for an increase of $1,000 in annual pay. An even larger effect comes from earning at or above the Social Security taxable maximum. Workers at or above this income level are 10 percentage points more likely to have an integrated plan, but for those with more than one plan the probability of pension integration goes up by 13 percentage points.     

Public pensions and immigration policy in a democracy

The paper analyzes the link between the public pension system and the immigration policy. In a pay-as-you-go system, the incentives for immigration vary significantly between individuals at different lifetime periods. In the framework of an overlapping generations model, we show that the median voter's choice in general leads to inefficient levels of immigration. The median voter neglects the effects of the externalities within the pension system on other generations. An immigration policy that is not affected by the median voter's choice but instead is constitutionally determined will avoid welfare losses. The expected lifetime income of each generation can be increased by applying a rule of steady immigration.     

Pay for politicians and campaign spending: evidence from the French municipal elections

Public Choice - This paper investigates the relationship between taxation and firm performance in developing countries. Combining firm-level data from the World Bank Enterprise Surveys and tax data...     

Corruption monitoring and the supply of politicians in China

Monitoring institutions are usually perceived as efficient instruments for improving governance. This article evaluates the link between corruption monitoring and the supply of politicians in nondemocracies. Using China as a case, I show that corruption monitoring pushes capable young elites away from seeking government positions. This effect may be driven by two possible mechanisms: economic returns and career prospects. Specifically, corruption investigations may reduce the expected economic returns for government officials, undermining capable young elite’ willingness and efforts to become government officials. In addition, corruption investigations may indicate that there are potential uncertainties and risks involved when taking on a political career, which reduce capable young elites’ desire to pursue a political career. The empirical analysis confirms these two mechanisms and provides unique evidence for the unintended negative impact of corruption monitoring institutions.     

International trade policy: Benevolent dictators and optimizing politicians

The claim that sophisticated non-operational efficiency-based arguments for intervention facilitate obfuscatory policy-induced income transfers will meet, in some quarters, the counterclaim that this is an overly cynical interpretation of politicians' policy motives. Rent-seeking can likewise be argued to be an overly cynical conception. The theory of rent-seeking would impute self-interest motives to the offer of payment for a cup of coffee.The different perceptions of policy motives are particularly evident when the debate turns to the existence of politically allocated rents. The beneficiaries of politically allocated rents have an interest in denying the existence of rents that have been allocated via the discretionary political process, and in claiming that observed transfers reflect socially warranted considerations.     

Party performance explains disagreement between politicians and their parties

Are politicians more likely to disagree with their party after an electoral defeat or during a spell in opposition? If so, are they likely to advocate a more moderate or a more radical position than their party? In order to evaluate this, the article analyses the absolute distance between candidates for parliament and their parties on the left–right dimension. The sample used consists of 5614 politicians from 11 countries (Comparative Candidate Survey). Controlling for party system differences and individual characteristics, the results demonstrate that politicians take more moderate positions than their party after an electoral defeat. Also politicians of government parties are surprisingly more likely to disagree than politicians of opposition parties. These results overlap with predictions of party position shifts and inform the discussion on how intra-party dynamics bring about changes in party position. In addition, the article finds evidence of loss aversion, and differences in the responsiveness of elite and non-elite candidates.     

More politicians,more corruption: evidence from Swedish municipalities

In the literature on political economy and public choice, it is typically assumed that government size correlates positively with public corruption. The empirical literature, however, is inconclusive, owing to both measurement problems and endogeneity. This paper creates a corruption index based on original data from a survey covering top politicians and civil servants in all Swedish municipalities. The effect of more politicians on corruption problems is analyzed using discontinuities in the required minimum size of local councils. Despite the fact that Sweden consistently has been ranked among the least corrupt countries in the world, the survey suggest that non-trivial corruption problems are present in Sweden. Municipalities with more local council seats have more reported corruption problems, and the regression discontinuity design suggests that the effect is causal.     

Distilling frenzy from academic scribbling: How economics influences politicians

Some economists misunderstand the way their work is used in policymaking. They claim to be providing dispassionate predictions and parameter estimates to politicians, but often—sometimes unwittingly—the economists' main contribution is to construe a complex issue as a problem (for example, a market imperfection) capable of solution. And the economists' solutions depend as much on their conception of the public good as on their technical algorithms. As a result, for good or ill, economics is as influential for its implicit ethical theory as for its predictions. Ignorance of that fact makes some social scientists less influential with policymakers than they might otherwise be.     

Shirking and sorting in a political market with finite-lived politicians

This paper analyzes principal-agent slack in the context of a political market composed of voters, challengers, and incumbents. The introduction of a last period (via finite-livedness) in combination with voters' imperfect information about politicians' preferences causes time-varying shirking behavior on the part of politicians. Political markets eventually sort out those politicians with significantly deviant policy preferences, potentially providing a solution to the last period problem and enabling politicians to make credible commitments. In the extreme, sorting can insure that it is not worthwhile for potential shirkers to run for office. A systematic relationship between political shirking and number of terms in office may exist, and depends on how quickly sorting takes place. We show that evidence of little if any shirking is quite consistent with politicians having diverse and strongly held policy preferences. In addition, if sorting is a significant feature of political markets, cross-sectional studies will tend to oversample little- and non-shirking politicians compared to longitudinal studies. Reinterpretations of existing empirical work are also discussed.We wish to thank John Bond, Donald Deere, Gertrud Fremling, Tim Gronberg, Michael Munger, Russell Roberts, and the participants of workshops at Dartmouth College, Texas A&M University, University of Houston, University of Texas, Yale Law School, and the 1987 Public Choice Meetings for valuable discussions on earlier drafts of this paper. An earlier version of this paper was issued as working paper E-87-34 by the Hoover Institution. The views expressed here do not necessarily reflect those of the U.S. Sentencing Commission nor those of any of its Commissioners. Any remaining errors are of course our own.     

When and why politicians do not keep their welfare promises

Although the welfare state is a core theme in most national elections in Western democracies, surprisingly little attention has been paid to the causes of welfare state pledge‐breaking. This article presents an argument that explains when governments do not do what they promised and tests it using an innovative research design with data covering four decades and 18 countries. The argument is able to account for several important but, until now, undescribed phenomena. First, nowadays, governments, on average, deliver less welfare than they promised, whereas in the 1970s they used to deliver more than promised. Second, the pledge‐breaking of governments has become highly dependent on the parliamentary opposition's position on the welfare issue. When the opposition favours fiscal and economic responsibility, governments’ tendency to deliver less welfare than promised is amplified. In contrast, when the opposition emphasises the positive benefits of generous welfare, such as equality and social justice, governments become more prone to keep their promises. Third, this conditional effect of the opposition is a recent occurrence that only emerged after the number of potential swing voters increased as class‐based voting gradually declined from the 1970s onwards.     

A comparison of prospective and retrospective voting with heterogeneous politicians

A long-standing empirical literature has been concerned with determining whether voters vote “prospectively or “retrospectively.” Despite this interest, little is known about the consequences of one voting regime versus another. This study addresses this deficiency. We find that voter welfare can be greatly affected by the candidate selection technique employed by voters. Among other findings, we show that “electing the best candidate” does not always maximize voter welfare. Furthermore, “myopic” voting is sometimes superior to “farsighted” voting. These findings have implications for interpretations of empirical studies of voter behavior.     

Mandating private pensions: experience in four European countries.

This study examines the experience of four countries--the Netherlands, Sweden, Switzerland, and the United Kingdom--in which the mandating of private pensions exists or has been considered. Proposals to mandate private pensions in the United States have been introduced in Congress several times. The analysis of foreign thinking presented here provides a background on the reasoning behind such a policy and on the integration of private and public systems and the problems involved. A prime reason for mandating private pensions--instead of seeking higher social security benefits or additional social security layers--has been the pressure to avoid higher payroll taxes. Some countries already had such high contribution rates that they sought other means to improve benefits. Adding a layer of private pensions, it was thought, does not involve Government mechanisms and keeps the money in the private sector. Yet mandating by law creates many problems, and no country has fully implemented such legislation.     

The changing representation interface: democracy and direct contact with politicians

The interface between politicians and the electorate is a vital component of the infrastructure of democracy and politicians now have many more tools available to communicate and engage with the electorate. Direct contact between politicians and the electorate is associated with increased levels of civic engagement. In this article, we examine the responsiveness of politicians in the UK by conducting: (i) an innovative test of responses to an undecided voter's email and (ii) follow-up interviews with electoral candidates. We found that a majority of electoral candidates had an identifiable email address and more than half responded to our undecided voter's email. However, there were considerable differences in the content relevance of the responses. There were also very few follow-up emails or further contact from the electoral candidates, suggesting only limited evidence of an integrated communication strategy. Electoral candidates also expressed concerns about communicating in a way that was ‘on record’. The findings provide a unique insight into the dynamics of communication between politicians and the electorate and the changing nature of the representation interface. Whilst the Internet has the scope for more personalized and two-way communication and for electors to hold politicians to account, it seems that politicians are more focused on campaign advantage rather than renewing the representation interface.     

Support for electoral system reform among voters and politicians: Studying information effects through survey experiments

Does information about the consequences of proposals to change the Norwegian parliamentary electoral system influence voters' and politicians' attitudes towards the system? Is the willingness to accept change greater among voters/politicians who “lose” under the present electoral system? These questions are illuminated using empirical data from two identical survey experiments, with responses from both voters and politicians about 1) increased proportionality between parties (more seats for smaller parties) and 2) increased geographical proportionality (stronger representation for the more populous counties). The results show that being informed about the consequences of the proposals has a major effect on voters' and politicians' attitudes. This applies especially to the question of increased proportionality between parties, where feedback was particularly negative from respondents who were told that the proposal might weaken the larger parties’ representation and make it more difficult to establish viable governments. The responses to the question about increased proportionality between parties were also influenced by partisanship; politicians who belonged to or voters who voted for one of the smaller parties favour increased proportionality. We also find that there is limited support for the proposal to distribute parliamentary seats according to the number of inhabitants in the counties, and this support is further reduced when the respondents are informed that the measure will increase representation from the more populous parts of the country.