European Journal of Political Economy 19, 2002, S. 153-158; “When will the Germans Get Trapped in their Pension System?” (together with Silke Uebelmesser), CESifo Working Paper No. 561, September 2001; NBER Working Paper No. 8503, October 2001.
Abstract
An impending demographic crisis in Germany calls for fundamental reforms of the pensionsystem. In a democracy, however, reforms require the support of the majority of the electorate. Todetermine whether the majority is in favour of reforms of the pension system, we calculate for eachyear the ‘‘indifference age’’ as the age of the cohort that is not affected by the reform and the‘‘median age’’ as the age of the politically decisive cohort. Until 2016, a reform can bedemocratically enforced. After 2016, Germany will be a gerontocracy.
JEL classification:
H55
Keywords:
Demographic crisis; Pension reform; Political feasibility; Median age; Indifference age