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Voting in the aftermath of a pension reform: the role of financial literacy

Published online by Cambridge University Press:  24 July 2018

University of Torino and CeRP – Collegio Carlo Alberto, Torino, Italy (e-mail:
University of Torino and CeRP – Collegio Carlo Alberto, Torino, Italy (e-mail:
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This study documents that the electoral cost of major pension reforms is lower in countries where the level of financial literacy is higher. The evidence from data on legislative elections held between 1990 and 2010 in 21 advanced countries is robust when we control for macroeconomic, demographic, and political conditions. Interestingly, these findings are not robust when we use less specific indicators of human capital as general schooling, supporting the view that knowledge of basic economic and financial concepts has distinctive features that may help reduce the electoral cost of reforms having a relevant impact on the life cycle of individuals.

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We thank: Roel Beetsma, Anne Lavigne, Muriel Roger, and Giovanni Gallo for their constructive comments; participants in the Netspar International Pension Workshop (Leiden, January 2017), «La Sapienza» seminar (Rome, February 2017), the 10th Financial Risks International Forum (Paris, March 2017), the Workshop on Household Finance and Economic Behaviour (Turin, May 2017), the 15th International Conference on Pension, Insurance and Saving (Paris, May 2017), and the Workshop on Retirement: Public Policy Evaluation (Annecy, June 2017) for useful discussion; Antoine Bozio, Tabea Bucher-Koenen, Agnieszka Chlon-Dominczak, Robert Gal, Robert Holzmann, Mauro Mastrogiacomo, Theo Nijman, Ed Palmer, Steinar Strøm, Tarmo Valkonen, Frank Vandenbroucke for their help on specific pension reforms; the referees and the editor for helpful comments and suggestions. The usual disclaimer applies.


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