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The Progressivity of Social Security

Author

Listed:
  • Coronado Julia Lynn

    (BNP Paribas)

  • Fullerton Don

    (University of Illinois at Urbana-Champaign)

  • Glass Thomas

    (Glass & Company Certified Public Accountants, P.C.)

Abstract

How much does the current social security system redistribute from rich to poor? We propose alternative concepts of well-being that can be used to classify individuals from rich to poor, and we show how social security redistributes differently under each concept. We use the PSID to estimate lifetime wage profiles and actual earnings each year for a sample of 1778 individuals, and we use mortality probabilities to calculate expected payroll taxes and social security benefits. For a given set of “facts” about the net flows experienced each year by each individual, measured progressivity depends on many assumptions. This paper attempts to capture and to quantify all of the data and characteristics relevant to determine each individual’s “income” under several definitions. We then use each definition of income to classify individuals from rich to poor and to calculate the progressivity of social security.

Suggested Citation

  • Coronado Julia Lynn & Fullerton Don & Glass Thomas, 2011. "The Progressivity of Social Security," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 11(1), pages 1-45, November.
    • Handle: RePEc:bpj:bejeap:v:11:y:2011:i:1:n:70
    DOI: 10.2202/1935-1682.1843
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    More about this item

    JEL classification:

    • H22 - Public Economics - - Taxation, Subsidies, and Revenue - - - Incidence
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions

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