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When Elders Rule: Is Gerontocracy Harmful for Growth?

From EconPapers. The first article lets you follow up on the political economy of political systems that overrepresent the interest of retirees. (Of course, if you read the abstract that’s not their phrasing.) The second addresses the point I’ve made in class and on the blog, that the social security trust fund is economically meaningless; they stress how it has led the debate over retirement in counterproductive directions.

When Elders Rule:Is Gerontocracy Harmful for Growth?

By: Vincenzo Atella and Lorenzo Carbonari (University of Rome “Tor Vergata”)


We study the relationship between gerontocracy and aggregate economic performance in a simple theoretical model where growth is driven by human capital accumulation and productive government spending (investments in ICT). We show that gerontocratic élites display the tendency to underinvest in public education and productive government services, thus being harmful for growth. In absence of intergenerational altruism, the damage caused by gerontocracy is mainly due to the lack of long-term delayed return on investments, originated by the shorter life horizon of the elder ruling class. An empirical analysis is carried out to test theoretical predictions across different countries and different economic sectors. The econometric results confirm our main hypotheses.

Improving Understanding of the Social Security OASDI Trust Fund

By: Schmult, Brian


This paper argues that the Social Security OASDI Trust Fund is widely misunderstood by the public, thereby corrupting the debate on how to handle future scheduled benefits, and increasing the risk of program changes that would not be accepted if people understood how the program functions. The Trust Fund is a fiscal nullity but appears to be regarded by many as essential, hence the public debate is about how to “fix” it, rather than about the moral question of whether to fund scheduled benefits, which are clearly affordable. This misunderstanding indicates the need for a shift in emphasis in public descriptions of the program. For this, this paper lays out a set of data, arguments and analogies that are asserted to be accurate representations of the OASDI program and Trust Fund operation, and which are proposed as tools for public education. Finally, this paper argues that an important step in shifting public debate is to re-institute full recourse to Treasury funding for any payroll tax shortfall, which will force the public debate back to benefit levels and revenue sources.