Work detail

The Political Sustainability of Pension System

Author: Mgr. Viktor Zeisel
Year: 2011 - summer
Leaders: doc. PhDr. Martin Gregor Ph.D.
Work type: Economic Theory
Language: English
Pages: 77
Awards and prizes: M.A. with distinction from the Dean of the Faculty of Social Sciences for an excellent state-final examination performance.
Abstract: The master thesis evaluates in theoretical models political sustainability of
public pensions system when the households are time inconsistent. It uses
overlapping generations model with two working generations and one retired.
It shows that myopia (shortsightedness) increases the political support
for public pension schemes in the model where median voter decides about
the obligatory contribution rate into the public pension system. The reason
is that the households use the obligatory contribution rate as a commitment
device to overcome their time inconsistency. In the model with endogenous
returns to capital, the presence of myopia also explains that households may
prefer a mix of public and private pension system. The thesis also shows
that expansion of the public pension system crowds out capital accumulation.
The effect of myopia on this crowding out effect is tested in an interest
group model and it is shown that its sign depends on the parameters of the
economy. The extent of activity of the interest group is thus dependent on
the parameters of the economy.
Downloadable: Diploma Thesis of Zeisel


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