TY  - JOUR
AU  - Caucutt,Elizabeth M.
AU  - Cooley,Thomas F.
AU  - Guner,Nezih
TI  - The Farm, the City, and the Emergence of Social Security
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 12854
PY  - 2007
Y2  - January 2007
UR  - http://www.nber.org/papers/w12854
L1  - http://www.nber.org/papers/w12854.pdf
N1  - Author contact info:
Elizabeth M. Caucutt
Department of Economics
Social Science Center
The Univeristy of Western Ontario
London, ON N6A 5C2, Canada
E-Mail: ecaucutt@uwo.ca

Thomas F. Cooley
Department of Economics
Stern School of Business
44 West 4th Street, Room 7-88
New York, NY  10012-1126
Tel: 212/998-0870
Fax: 212/995-4218
E-Mail: tcooley@stern.nyu.edu

Nezih Guner
MOVE
Facultat d’Economia
Edifici B – Campus de Bellaterra
08193 Bellaterra
Cerdanyola del Vallès
Spain
E-Mail: nezih.guner@movebarcelona.eu
AB  - During the period from 1880 to 1950, publicly managed retirement security programs became an important part of the social fabric in most advanced economies. In this paper we study the social, demographic and economic origins of social security. We describe a model economy in which demographics, technology, and social security are linked together. We study an economy with two locations (sectors), the farm (agricultural) and the city (industrial). The decision to migrate from rural to urban locations is endogenous and linked to productivity differences between the two locations and survival probabilities. Furthermore, the level of social security is determined by majority voting. We show that a calibrated version of this economy is consistent with the historical transformation in the United States. Initially a majority of voters live on the farm and do not want to implement social security. Once a majority of the voters move to the city, the median voter prefers a positive social security tax, and social security emerges.
ER  -