Abstract
This paper undertakes an empirical analysis of the adoption of contributory social security systems and effective and specific contribution rates. Conditional on country-(time-)specific economic determinants of the setting of these components, the empirical analysis focuses on the role of contagion for policy adoption. Specifically, the paper assesses to which extent a country’s integration into the international network of economic and political cooperation, the similarity of political systems, and economic interdependence facilitate the adoption of a social security system, its components, and its contributions across economies. The findings suggest that proximity through common policy, geographical neighborhood, and common culture is important for the diffusion of any type of social security scheme among proximate countries. Further, contagion matters for the adoption probability of specific contribution systems as such, as well as for the setting of contribution rates for both employers and employees.
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