The Political Economy of Redistributive Social Security

International audienceThe aging of the population constitutes nowadays one of the most important economic problem facing our societies. Most pension systems in the developed countries are of the Pay-As-You-Go (PAYG) type, which means that income is redistributed from the workers to the retirees. Because of falling mortality and fertility rates, the ratio of contributors to beneficiaries is decreasing. Consequently, governments must find solutions to ensure the financial viability of the PAYG systems. This means raising the retirement age, decreasing the replacement rate or increasing the ratio of contribution to the system