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The Political Economy of Underfunded Municipal Pension Plans / Jeffrey Brinkman, Daniele Coen-Pirani, Holger Sieg.
- Format:
- Book
- Author/Creator:
- Brinkman, Jeffrey.
- Series:
- Working Paper Series (National Bureau of Economic Research) no. w22321.
- NBER working paper series no. w22321
- Language:
- English
- Physical Description:
- 1 online resource: illustrations (black and white);
- Place of Publication:
- Cambridge, Mass. National Bureau of Economic Research 2016.
- Summary:
- This paper analyzes the determinants of underfunding of local government's pension funds using a politico-economic overlapping generations model. We show that a binding downpayment constraint in the housing market dampens capitalization of future taxes into current land prices. Thus, a local government's pension funding policy matters for land prices and the utility of young households. Underfunding arises in equilibrium if the pension funding policy is set by the old generation. Young households instead favor a policy of full funding. Empirical results based on cross-city comparisons in the magnitude of unfunded liabilities are consistent with the predictions of the model.
- Notes:
- Print version record
- June 2016.
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