The emergence of redistributive pensions in the developing world
Pension schemes that redistribute money to the elderly have seen a remarkable surge in developing countries. To explain this phenomenon we build a political economy model of a Beveridgean pay-as-you-go social security system which incorporates family transfers driven by costs of non-compliance to a social norm. For appropriately chosen weights of a political support function a government will choose to increase pensions if the share of the urban population increases, productivity differentials between urban and rural workers widen, or if the social norm erodes.
H55 - Social Security and Public Pensions ; D72 - Economic Models of Political Processes: Rent-Seeking, Elections, Legistures, and Voting Behavior ; O18 - Regional, Urban, and Rural Analyses