TY  - JOUR
AU  - Razin,Assaf
AU  - Sadka,Efraim
AU  - Swagel,Phillip
TI  - The Aging Population and the Size of the Welfare State
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 8405
PY  - 2001
Y2  - July 2001
UR  - http://www.nber.org/papers/w8405
L1  - http://www.nber.org/papers/w8405.pdf
N1  - Author contact info:
Assaf Razin
Department of Economics
Cornell University
Uris 422
Ithaca, NY 14853
Tel: 607/255-9625
Fax: 607/255-2818
E-Mail: ar256@cornell.edu

Efraim Sadka
Tel Aviv University
Eitan Berglas School of Economics
P.O.B. 39040
Ramat Aviv, Tel Aviv, 69978, ISRAEL
E-Mail: sadka@post.tau.ac.il

Phillip Swagel
E-Mail: pswagel@umd.edu
AB  - Data for the United States and countries in Western Europe indicate a negative correlation between the dependency ratio and labor tax rates and the generosity of social transfers, after controlling for other factors that influence the size of the welfare state. This is despite the increased political clout of the dependent population implied by the aging of the population. This paper develops an overlapping generations model of intra-and inter-generational transfers (including old-age social security) and human capital formation which addresses this seeming puzzle. We show that with democratic voting, an increase in the dependency ratio can lead to lower taxes or less generous social transfers.
ER  -