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European Journal of Political Economy Vol. 18 (2002) 1– 29 /locate/econbase The political economy of social security: a survey Vincenzo Galasso a,b,c,*, Paola Profeta d,1 aIGIER, via Salasco 3/5, 20136 Milan, Italy bDepartamento de Economia, Universidad Carlos III de Madrid, 28903 Getafe, Spain cCEPR, London, UK d ` Istituto di Economia Politica, Universita Bocconi, via Gobbi 5, 20136 Milan, Italy Received 1 October 2000; received in revised form 1 May 2001; accepted 1 May 2001 Abstract This paper surveys the literature on the political economy of social security. We review models that address the following questions: (i) Why do social security programs that transfer resources from young and middle-aged workers to the elderly exist? (ii) What are the economic and political interactions between social security systems and other redistributive programs of the welfare state? (iii) How does political sustainability shape social security systems in a dynamic economic and demographic environment, and which social security reforms are politically feasible? We characterize this literature along two lines: economic factors and political institutions. We then assess the empirical relevance of the models by comparing their implications to stylized social security facts. D 2002 Elsevier Science B.V. All rights reserved. JEL classification: H53; H55; D72 Keywords: Redistribution; Multidimensional voting; Political pressure; Political sustainability; Social security reforms 1. Introduction All developed countries have a social security system. An overwhe