Journal of Public Policy

Research Article

Are Aging OECD Welfare States on the Path to Gerontocracy?

Evidence from 18 Democracies, 1980–2002

MARKUS TEPEa1 and PIETER VANHUYSSE

a1 School of Business & Economics Free University Berlin Garystr.21 14195 Berlin Phone: (+49)3083857184 markus.tepe@wiwiss.fu-berlin.de

a2 School of Politics and Faculty of Education University of Haifa Mount Carmel 31905 Haifa Israel Phone: (+972) 547682974 pieterv@construct.haifa.ac.il

ABSTRACT

Since 1990 the age of the average OECD median voter has increased three times faster than in the preceding 30 years. We use panel data from 1980–2002 to investigate the effects of population aging on both the program size and the benefit generosity of public pensions in 18 OECD countries. Population aging is accompanied by cutting smaller slices out of larger cakes: it increases aggregate spending on pensions but freezes or decreases the generosity of individual benefits. Controlling for political, institutional and time-period effects, we find that public pension efforts are significantly mediated by welfare regime type. Moreover, since the late 1980s pension effort has more fully adopted a retrenchment logic. It is the politics of fiscal and electoral straitjackets, not gerontocracy, which shape public pension spending today. While population aging is accelerating, contrary to alarmist political economy predictions democracies are not yet dominated by a new distributive politics of elderly power.

Key Words:

  • Generation;
  • Pension Politics;
  • Population Aging;
  • Welfare Retrenchment;
  • Median voter;
  • JEL Classification Numbers: H55, D72