The project analyzes economic and political design features of social security programs. It includes the construction of a large cross country and time series data set measuring various dimensions of program design, the size of social security administrations and their components as well as other related economic and social measures such as retirement patterns and old age political participation. A preliminary analysis uncovers a number of empirical regularities across countries. Four of those findings of the study are: (1) old age benefit eligibility almost always depends on a person's labor market status, (2) old age benefit eligibility rarely depends on a person's wealth, (3) social security appears to grow more than could be accounted by the growth of the retirement aged population or national income, (4) retirement aged citizens appear to devote more effort to political activities than do the young. These regularities indicates that both theoretical and the empirical analyses need to relate social the origin and growth of the social security administration to labor markets and to the political behavior of the retirement aged. The project will expand the data sets in various dimensions. The investigators will expand the institutional and `design` variables for a number of years and for a larger cross section of countries, include finer and more comprehensive measures of social security programs as well as retirement patterns of the retirement aged, and include measures of political, legal, and economic institutions. The PIs will also construct measures of `intensity` of political participation and separate the time intensive from the money intensive forms of participation. The project will also investigate `pressure group` and other models of collective choice that might explain why the retirement aged are able to get pensions from the young and why those pension have the eligibility requirements and other features mentioned above. A preliminary analysis of a model where the political power of a particular group depends on the amount of time devoted to political activities, the investigatorrs show that the retirement aged have incentives to introduce retirement inducing regulations like the ones observed in the data, which will reduce the value of the time of the members of their own group. This, in turn, enlarges their political power and will allow them to extract more transfers from the young. The model explains why the pension system induces the retirement aged to retire, why the size of the social security program appears to be related to the amount of restrictions on the work of the retirement aged, why the retirement aged are more interested in politics, and why they devote a larger fraction of their time to political activities.
