The US Social Security System: What Does Political Sustainability Imply?
AbstractThis paper examines how political constraints can shape the social security system under different demographics. A steady state mapping between relevant economic and demographic variables and the social security tax rate resulting from a majority voting is provided. I calibrate an OLG model to the US economy. Calculations using Census population and survival probabilities projections, and 1961-96 labor productivity growth deliver a social security tax rate of 13.3% (currently 11.2%), and a 54% replacement ratio (51.7%). This result reflects the median voter's aging, from 44 to 46 years, which dominates the decrease in the dependency ratio, from 5.45 to 4.72. (Copyright: Elsevier)
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Bibliographic InfoArticle provided by Elsevier for the Society for Economic Dynamics in its journal Review of Economic Dynamics.
Volume (Year): 2 (1999)
Issue (Month): 3 (July)
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Postal: Review of Economic Dynamics Academic Press Editorial Office 525 "B" Street, Suite 1900 San Diego, CA 92101
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Find related papers by JEL classification:
- H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
- E17 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Forecasting and Simulation: Models and Applications
- D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
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