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Economics of Governance

, Volume 4, Issue 1, pp 57–80 | Cite as

Voting on public pensions with hands and feet

  • Alexander Haupt
  • Wolfgang Peters
Original Paper

Abstract.

Aging changes the political power in a democracy in favor of the older generations. With free labor mobility like that of the EU, the success of the gerontocracy is, nevertheless, limited by migration of the young generations. This connection between political voting and voting with the feet is analyzed in a two-country model with overlapping generations. The interregional competition on public pensions yields premium payments which are larger when the young generations' migration decisions take the impact on future pensions into account (strategic migration) than when these decisions are made myopically. The paper also pays attention to migration (in-)efficiency and to the implications of harmonization principles.

Key words: Interregional competition on public pensions, migration, labor mobility, gerontocracy 
JEL Classification Numbers: D72, F22, H55 

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Copyright information

© Springer-Verlag Berlin Heidelberg 2003

Authors and Affiliations

  • Alexander Haupt
    • 1
  • Wolfgang Peters
    • 1
  1. 1.Department of Economics, European University Viadrina, PO Box 1786, 15207 Frankfurt (Oder), Germany (e-mail: peters@eur-frankfurt-o.de) DE

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